SoftBank has recently announced a significant loss of ¥369.2bn ($2.4bn) for its fiscal third quarter, marking a sharp contrast to the ¥950bn gain from the same period last year. This financial setback has raised eyebrows, as the company missed analysts’ expectations, who had predicted a net profit of ¥234bn. The massive loss is largely attributed to the underperformance of SoftBank’s tech-heavy investment vehicles, particularly its Vision Funds, which had previously seen two consecutive quarters of gains.

Vision Funds Take a Hit

The Vision Funds, which are known for their volatile nature, reported a ¥352.7bn loss. This loss stems from several factors, including a decline in the valuation of high-profile public companies within the fund. Notable companies like South Korean e-commerce giant Coupang and Chinese ride-hailing company Didi were among the hardest hit. Analysts suggest that while the loss is significant, it may not be the sole focus when considering SoftBank’s future trajectory.

Kirk Boodry, an analyst at Astris Advisory, pointed out that the real question now lies in how SoftBank plans to pivot its investments. With a heavy focus on artificial intelligence, all eyes are on how the company intends to finance its ambitious AI plans, including a project that could revolutionize the industry.

Betting Big on AI: Stargate and OpenAI

SoftBank’s founder, Masayoshi Son, is at the helm of one of the largest-ever investments in artificial intelligence. One of the standout initiatives is “Stargate,” an AI infrastructure project that Son recently revealed in partnership with OpenAI’s Sam Altman. The project is expected to receive an initial investment of $15bn to $20bn, with projections suggesting SoftBank could spend up to $500bn over the next four years.

This massive financial commitment is a pivotal moment for SoftBank, as it aims to position itself at the forefront of AI development. However, the timing could be risky, given the current financial losses and market volatility. Still, SoftBank remains undeterred in its goal to secure a dominant position in the emerging AI space.

In addition to Stargate, SoftBank is also poised to invest between $15bn and $25bn into OpenAI, the creator of the popular AI model, ChatGPT. This is part of a broader funding round that could see OpenAI raise up to $40bn. These investments underscore SoftBank’s belief in the future of AI and its potential to drive significant returns, even as the company grapples with its recent losses.

What’s Next for SoftBank?

As SoftBank navigates through this challenging financial period, the company’s ability to execute on its AI strategy will be crucial. The Vision Funds’ volatility may raise concerns among investors, but if projects like Stargate and its support for OpenAI pay off, SoftBank could emerge stronger in the long run.

The next few years will be pivotal in determining whether SoftBank’s massive AI investments will bear fruit, or if the company’s bold moves will lead to further financial struggles. For now, all eyes are on Masayoshi Son and SoftBank’s next steps as they double down on one of the most significant technological revolutions of our time.