SoftBank unexpectedly records a $2.4 billion loss in Q3 as its Vision Fund investments turn negative.

Unexpected Red Quarter and Vision Fund Setbacks

SoftBank Group reported an unforeseen quarterly loss as its Vision Fund investments slipped into negative territory. The Japanese conglomerate’s revenue for the quarter reached 1.83 trillion yen, narrowly missing the 1.84 trillion yen forecast by analysts. More strikingly, SoftBank posted a net loss of 369.17 billion yen (approximately $2.4 billion), a stark reversal from the anticipated profit of 298.53 billion yen. For the quarter ending December 31, the company's Vision Fund investments alone declined by 352.75 billion yen—undoing gains made in the two previous quarters. When broader factors such as administrative costs and currency fluctuations are taken into account, the overall Vision Fund segment reported a loss of 309.93 billion yen.

Delving deeper into the portfolio performance, SoftBank experienced a 2.1% drop in the fair value of its Vision Fund 1 public companies, largely due to a fall in the share price of e-commerce leader Coupang. Additionally, its private company investments dipped by 3.3%, culminating in an overall 2.8% decline for Vision Fund 1 compared to the prior quarter-end. Similarly, Vision Fund 2 saw its fair value decrease by 3.7%, driven by reduced valuations in public companies like EV manufacturer Ola Electric Mobility and warehouse automation firm AutoStore, despite a rise in the stock price of food delivery firm Swiggy following its November 2024 listing.

Strategic Pivot Towards AI

In response to recent challenges from high-value investments that have underperformed or been marked down, SoftBank is strategically repositioning itself to capitalize on the burgeoning artificial intelligence market. With the AI boom driving unprecedented demand for chips and data center GPUs—a trend that has benefited companies such as Nvidia—SoftBank is on the verge of finalizing a landmark $40 billion primary investment in OpenAI at a pre-money valuation of $260 billion. If this deal comes to fruition, SoftBank will become the top backer of OpenAI, overtaking Microsoft, especially significant given that private investors last valued the AI startup at $157 billion in October.

In addition to the major OpenAI investment, SoftBank has committed to spending $3 billion annually on OpenAI’s technology. The partnership is further strengthened by a newly announced joint venture, SB OpenAI Japan, which aims to exclusively market OpenAI’s enterprise solutions to Japan’s leading companies. These strategic moves mark a clear shift from SoftBank's previous high-profile bets toward embracing opportunities in the rapidly evolving AI sector. SoftBank’s earnings were reported after the Tokyo Stock Exchange closed, and the company’s shares have enjoyed a notable 45% increase over the past year, underscoring investor optimism in its new strategic direction.