Key Takeaways:

• SoftBank Group reported a surprising net loss of ¥369.2 billion (US$2.4 billion) in the third quarter of fiscal 2023.
• The loss was primarily due to unrealized valuation declines in major investments, particularly in Coupang and Didi Global.
• Despite the loss, SoftBank is actively pursuing a massive investment in artificial intelligence (AI), seeking up to US$500 billion for its Stargate Project.

TOKYO: Japanese technology investor SoftBank Group has reported a net loss of ¥369.2 billion (US$2.4 billion) for the three months ending in December 2022, a stark contrast to a profit of ¥950 billion during the same period last year. The company's losses stemmed from declines in the value of its holdings in the Vision Fund, particularly impacting investments in the South Korean e-commerce platform Coupang and Chinese ride-hailing firm Didi Global. This unexpected financial performance raises critical questions about how the company will finance its significant aspirations in AI, including a proposed investment of up to US$500 billion in the Stargate Project, in partnership with OpenAI.

As of the end of December, SoftBank's cash reserves decreased to ¥4.7 trillion (US$30.6 billion) from ¥6.2 trillion earlier in the year. The Vision Fund's second quarter mapped out an investment loss of ¥352.7 billion, effectively breaking a string of two consecutive profitable quarters. The stark drop is noted against market expectations, which forecasted a net profit of ¥234 billion.

Masayoshi Son, SoftBank’s founder, is advocating for sizable financial commitments, including a potential initial investment of US$25 billion in OpenAI, which has recently seen interest in that figure rise to US$40 billion. Furthermore, SoftBank has pledged US$15 billion for the Stargate project aimed at bolstering AI infrastructure, particularly across the United States.

The Vision Fund has undergone significant volatility, with its performance subject to the ups and downs of the tech market. The tumultuous market conditions led to discussions about leveraging equity and loans to realize the ambitious AI plans alongside established technology partners like Oracle and the United Arab Emirates-based investor MGX.
As parts of the strategy unfold, the full extent of Stargate's financial architecture remains uncertain, but this project seems pivotal to Son’s renewed aggressive investment strategy.

For more details, refer to the original articles from Channel News Asia, Reuters, and South China Morning Post.