SoftBank faces AI-strategy scrutiny at earnings after tech selloff
A $64.6 billion outlay for a 13% OpenAI stake and 10.8 trillion yen of net interest-bearing debt hang over Tuesday's results.
By Marcus Rodriguez ·
Why it matters: Declining valuations for major holdings such as Arm are putting pressure on SoftBank's debt-backed AI strategy as investors seek clarity on potential further borrowing.
For information only, not investment advice. Prices delayed.
SoftBank Group ($SFTBY) reports second-quarter earnings on Tuesday with its AI strategy under pressure after a broad AI-stock rout and China's block of its planned robotics deal.1 SoftBank has spent $64.6 billion for a 13% stake in OpenAI, and at the end of June it carried 10.8 trillion yen ($68 billion) of net interest-bearing debt, versus 6.6 trillion yen a year earlier.1
SoftBank shares fell 11% on Friday as the cost of insuring its debt against default hit a four-year high, then dropped another 4.2% on Monday, leaving them down 23% year to date.1 Its five-year CDS spread stood at 466 basis points, the widest since October 2022, per Markit data cited via Reuters.2 SoftBank shares were down 45% over the past month, Yahoo Finance reported.3
China blocked SoftBank's planned $5.4 billion purchase of ABB's robotics division, ABB said Thursday, a decision the Financial Times first reported.2 SoftBank's holdings span AI model developers, data-centre infrastructure, semiconductors and robotics; Arm Holdings ($ARM) stood at $175 on Friday after falling about 60% from a June high, and Jefferies has flagged pressure when Arm trades meaningfully below $200.1
LSEG-polled forecasts for July-September net profit range from a 233 billion yen ($1.5 billion) gain to a 113 billion yen loss, with numbers due at 0630 GMT and a briefing by CFO Yoshimitsu Goto at 0730 GMT.1 Futurum's Rolf Bulk told Reuters SoftBank may need to stop investing, de-lever and dispose of some positions — a path it has taken before.1
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Tags: earnings · ai · semiconductors · markets-moves · mergers-acquisitions · china