SoftBank recorded a 1.1 trillion yen net loss for the July-September quarter. The tech giant got hit by a $3.7 billion loss from US data centre projects and rising financing costs. These results showed how volatile the company is, especially as investor sentiment toward the AI sector cooled down.
The result will likely intensify questions about how well the tech investment giant can weather setbacks currently buffeting the AI sector, given founder Masayoshi Son's big bets on data centres and the company's $64.6 billion purchase of a 13% stake in ChatGPT maker OpenAI.
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SoftBank said it recorded a $3.7 billion loss due to a subsidiary's advance payments for power generation equipment to be used in AI data centre projects in the US including Pike County, Ohio. Those plans were later revised. It is, however, entitled to rebates of up to $2.1 billion on future purchases.
Its financing costs also more than doubled to 462 billion yen ($2.9 billion) in the quarter.
The 1.1 trillion yen net loss for the July-September quarter compares with a 2.5 trillion yen profit in the same period a year earlier when it logged a huge investment gain on an increase in the value of its stake in OpenAI.
SoftBank's earnings are volatile and difficult to predict. Forecasts from three analysts polled by LSEG had ranged from a profit of 233 billion yen to a loss of 113 billion yen.
AI SECTOR SETBACKS
The Democratic Party's sweeping success in US midterm elections last week heightened expectations of regulatory scrutiny, amplifying concerns that had been growing among investors about returns for the AI industry.
Though SoftBank's shares surged 14% on Tuesday ahead of the results, they have, like other AI stocks, been battered by the cooling investor sentiment, almost halving in value since the start of June.
SoftBank's heavy borrowing at sometimes eye-popping yields has been a concern for some investors.
During the quarter, SoftBank's borrowing included an $11.87 billion term loan, a $10 billion dollar-denominated corporate bond and a 1 trillion yen-denominated corporate bond.