SoftBank’s AI Power Bet Turns Into a $7 Billion Loss

SoftBank’s AI power bet just produced a brutal bill. The Japanese technology and investment giant reported a net loss of ¥1.12 trillion ($7 billion) for the fiscal second quarter, reversing ¥2.5 trillion in net income a year earlier. The results arrived on November 10, 2026, after SoftBank revised procurement plans for power-generation equipment tied to U.S. AI data center projects.

For the quarter ended September 30, net loss attributable to owners of the parent reached ¥1.1 trillion. Analysts had expected a ¥129 billion profit, making the reversal difficult to disguise as ordinary market noise—though SoftBank’s earnings rarely arrive without some financial weather.

The company recorded a ¥597.2 billion ($3.7 billion) loss over the six months ending September 30 because it changed those equipment procurement plans. The loss included $2.85 billion in non-refundable advance payments and $0.88 billion in contract modifications and settlements.

The cost of buying power before the shortage

Silver Bands 7 LLC, a subsidiary backed by SoftBank Group and SoftBank Vision Fund II-2, had reserved manufacturing capacity and agreed to equipment purchases ahead of anticipated supply constraints. A SoftBank executive said, “We made bridge investments in advance to secure power generation equipment in anticipation of shortage.”

Requirements changed at existing and planned projects, forcing Silver Bands 7 to revise that strategy. The derecognized advances covered equipment that no longer appeared in the revised procurement plans, while SoftBank’s accounting presentation separates those advances from cash payments for contract modifications and settlements expected from the third fiscal quarter onward.

SoftBank said the advance spending represented bridge investments made ahead of shortages, with recovery expected through project financing. Under its illustrative development structure, a special-purpose company would finance data-center buildings and power infrastructure through project finance without recourse to SoftBank Group, while the offtaker would provide servers and other IT equipment.

The numbers show how large that bridge became. Cumulative procurement payments reached $9.5 billion from the previous fiscal year through September 30, 2026, with $6.6 billion still allocated to equipment purchases for the PORTS-Pike power-generation project and other projects at quarter-end.

Silver Bands 7 also gained rights to rebates of up to $2.1 billion over the next 10 years on future equipment purchases, subject to conditions. SoftBank recognized no asset for those rights because the amount remained undetermined. The accounting is cautious; the procurement plan was less so.

SoftBank said the procurement loss was unrelated to PORTS-Pike. The company’s portfolio summary continued to list the Pike County, Ohio, campus as preparing for construction, with 8.0 gigawatts of IT capacity and a 20-year OpenAI lease signed August 17, 2026.

The Milam County, Texas, data center remained under construction with 753 megawatts of IT capacity and a 15-year OpenAI contract. The records distinguish a costly procurement reset from cancellation of the two U.S. campuses.

Investment losses add pressure

The equipment charge landed alongside weaker investment results and higher financing costs. Total investment gains fell 56.0% year over year to ¥1.73 trillion for the six-month period, while finance cost more than doubled to ¥790.7 billion.

SoftBank attributed the financing increase to larger borrowing and corporate-bond balances, higher funding rates, and full recognition of remaining unamortized financing costs when bridge loans were repaid early. The company’s debt-backed approach to AI investment is now showing up in both its income statement and the sensitivity of its bonds.

Revenue offered one cleaner number. Quarterly revenue reached ¥2.22 trillion, above the ¥2.02 trillion LSEG estimate, while revenue for the six months ended September 30 rose 13.3%, supported by telecommunications and AI computing businesses. SoftBank said its SoftBank segment recorded higher sales across all businesses, and its AI computing segment also increased revenue.

The Vision Fund segment swung to a ¥81.58 billion loss in the fiscal second quarter, compared with a ¥2.38 trillion profit a year earlier. Vision Fund 1 recorded a $20 million investment loss despite a $1.3 billion gain on ByteDance, as shares of publicly traded portfolio companies including Coupang and Grab declined.

Across the Vision Funds segment, investment gains fell to ¥85.45 billion from ¥2.81 trillion a year earlier. Vision Fund 2 posted ¥89.26 billion in investment gains, while Vision Fund 1 recorded a ¥3.86 billion loss on its investments.

OpenAI remains the central valuation swing factor. As of the end of September, SoftBank’s cumulative investment in OpenAI stood at $54.6 billion, with a fair value of $99.6 billion and a cumulative investment gain of $45 billion.

SoftBank said a potential increase in OpenAI’s valuation after a new funding round had not yet entered its results, pending an official announcement. OpenAI raised about $11 billion at a $1.25 trillion valuation after initially seeking $30 billion at a $1.4 trillion value, while discussions around Anthropic placed its valuation as low as $1.1 trillion instead of the previously touted $2 trillion.

SoftBank shares closed 13.9% higher on Tuesday, even though they had plunged more than 50% from their record high in June and lost about a third of their value over the last year. That rebound says investors still want exposure to the AI trade. The ¥1.12 trillion loss says exposure comes with a bill.

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