SFTBY Stock: Why is SoftBank’s Mayoshi Son Doubling Down on AI?

SoftBank Group [SFTBY] is a Japanese conglomerate whose business interests span financial services, telecommunications and semiconductors. 

Its subsidiaries include SoftBank Corp, one of Japan’s largest wireless carriers, and LY Corp [YAHOY], which operates the country’s Line messaging app. It also owns a majority stake in British chip designer Arm [ARM]. 

This stock spotlight will look at SoftBank’s increasing focus on artificial intelligence (AI) — including a recent decision to lead a $40bn funding round for OpenAI — how it is financing AI investment and what this might mean for the share price. 

SoftBank Leads Fresh OpenAI Funding Round

ChatGPT creator OpenAI announced on April 1 that it had raised $40bn in a funding round that doubles its valuation from $157bn to $300bn. SoftBank has pledged to cover 75% of the raise, paying $10bn by the middle of April, and $30bn between the end of the year and early 2026. 

According to SoftBank, a condition for the second tranche is that OpenAI must transition to a for-profit entity by early next year. 

The group said in a statement that it had “positioned OpenAI as its most important partner” as the company is the “closest to achieving artificial general intelligence (AGI)” and ensuring it benefits “all of humanity”. AGI is a theoretical AI system that hopes to replicate human-level intelligence and reasoning in computers. 

Along with OpenAI, SoftBank is also a leading partner in the Stargate Project, which will see $500bn spent on boosting US AI infrastructure over the next four years. 

OpenAI News Fails to Boost SFTBY Stock 

The OpenAI news on April 1 did not lift the SoftBank share price. This is more than likely because of market jitters leading up to US President Donald Trump’s tariff announcement the following day. 

SFTBY stock is down 17.63% since January 1 through April 9 and down 13.55% in the past month alone. The share price has slid 16.64% in the past 12 months. 

Vision Fund and Investments Results in Q3 Loss

SoftBank swung to a surprise loss of ¥369.17bn in its fiscal Q3 2024 from a ¥950bn net profit a year earlier. Net profit for the nine months to December 31 was ¥636.15bn compared with a net loss of ¥458.72bn in the same period a year ago. 

CFO Yoshimitsu Goto explained on the earnings call in February that the huge swing was due to a ¥339bn loss in its Vision Fund. Its investment in Alibaba [BABA] also lost ¥377bn in Q3, although this was cushioned slightly by a ¥185bn gain in its stake in T-Mobile [TMUS]. 

SoftBank’s diversified business holdings and investments means it can be hard to pinpoint an exact competitor. However, the group’s telecoms subsidiary SoftBank Corp is one of the three biggest mobile phone operators in Japan — the other two are Nippon Telegraph and Telephone Corporation’s [NTTYY] Docomo and KDDI’s [KDDIY] Au. 

According to Statista, NTT Docomo was the largest, with a 40.6% of mobile phone subscriptions in 2024; KDDI was second, with a 30.6% share; and SoftBank was third, with a 25.9% share. 

Here’s how the fundamentals of the three stocks compare:

Source: Yahoo Finance 

SFTBY Stock: The Investment Case 

The Bull Case for SoftBank 

The group is doubling down on its AI bet. Back in December, SoftBank CEO Masayoshi Son pledged $100bn in AI investments over the next four years, creating at least 100,000 jobs for Americans. This is twice the $50bn it committed in December following Trump’s first election win in 2016.

“My confidence level on the economy of the US has tremendously increased with [President Trump’s] victory,” said Son at a press conference at Trump’s Mar-a-Lago resort, adding that he is doubling down because Trump is “a double down president”. 

There have even been reports that SoftBank’s AI investments in the US could end up totaling $1trn. Regardless of whether they are true, Son will be hoping that its AI bet pays off in the long run and can deliver higher returns for shareholders. 

The Bear Case for SoftBank

Son’s AI vision will come at a price, though. SoftBank is reportedly weighing up a $16.5bn bridging loan to support its new investment in OpenAI, a move that would likely put financial strain on the company’s balance sheet.

Following the news, S&P Global released a note saying that the “massive” investment will put SoftBank in a worse financial position for the next six to 12 months. The credit rating agency described SoftBank’s financial management as “aggressive”. Meanwhile, the Japan Credit Rating Agency downgraded the company’s outlook from ‘stable’ to ‘negative’. 

The credit agency said that Stargate “will contribute to improving OpenAI’s competitiveness and strengthening its earning base”. However, it is taking a cautious stance because it remains to be seen “whether OpenAI’s corporate value can be continuously increased”.

Conclusion 

SoftBank is doubling down on its AI investments. However, investors may need to be wary as its bold bet could look expensive, especially in light of the recent market downturn.