SoftBank Group Corp. shares traded lower in choppy session on Thursday after the conglomerate announced a surprisingly strong fourth-quarter profit, a result that did little to ease investor anxiety over the company’s growing financial exposure to OpenAI.
The stock slipped almost 4% to 5,725.0 yen following an early-session uptick, underperforming the Nikkei 225 which rose 0.2% that day.
For the quarter ended March 31, SoftBank recorded a net profit attributable of 1.829 trillion yen ($11.61 billion). That outcome far exceeded Bloomberg’s estimate of a 295.2 billion yen profit and represented more than a threefold increase from the 517.18 billion yen profit reported in the same period a year earlier.
However, the headline profit was driven principally by a revaluation of SoftBank’s investment in the artificial intelligence company OpenAI. As of the end of March, SoftBank valued its OpenAI holding at $79.6 billion, reflecting a cumulative gain of $45 billion on the firm’s initial outlay.
Investors have expressed unease because that sizable profit contribution is tied to a single, volatile private holding and because SoftBank expanded its leverage to finance the OpenAI stake. The company continues to carry an outstanding balance of $17.5 billion on a $40 billion bridge loan arranged to support the investment in the AI developer.
SoftBank committed roughly $30 billion to OpenAI in fiscal 2025, selling several holdings to help fund the move, including stakes in Nvidia Corp, according to the company’s publicly reported actions. The conglomerate also used borrowings secured by its holdings in chip designer Arm and its unit SoftBank Corp to help finance the commitment.
OpenAI’s valuation rose sharply in March, when it received capital at an $852 billion valuation, up from a $500 billion valuation in an October funding round. That valuation step-up is central to the mark that contributed to SoftBank’s profit surge.
Yet questions about OpenAI’s operating momentum have surfaced. A Wall Street Journal report in late-April indicated the startup fell short of internal targets for weekly users and revenue. The company has been perceived by some market watchers as losing ground to competitors such as Anthropic and larger firms like Google, which have released comparable or, in some assessments, superior AI models in recent months.
Concerns have also been raised about OpenAI’s governance and long-term spending obligations. CEO Sam Altman has reportedly committed the company to roughly $600 billion in data-center infrastructure spending in coming years. These commitments have drawn scrutiny given both the scale and the timing of the planned expenditure, especially as reports circulate that OpenAI may pursue an initial public offering later this year.
Credit-watch actions have followed the shift in SoftBank’s balance sheet. In March, S&P Global Ratings downgraded its outlook on the company, citing that SoftBank’s asset liquidity, portfolio quality, and financial capacity could weaken because of its substantial investment in OpenAI.
SoftBank’s founder and CEO, Masayoshi Son, has remained publicly upbeat about the company’s OpenAI investment, framing the wager as a comprehensive commitment to AI technology. Despite that optimism, traders and analysts appear to be weighing the immediate earnings uplift against the medium-term financial and strategic risks tied to the concentration of value in a single private asset and the borrowings used to acquire it.
Summary
SoftBank reported a 1.829 trillion yen net profit for the quarter ended March 31, largely driven by a valuation increase in its OpenAI stake to $79.6 billion. The stock fell nearly 4% on investor concerns about the concentration of profit in a single private holding and the debt taken on to fund the investment, including an outstanding $17.5 billion on a $40 billion bridge loan. S&P Global Ratings lowered its outlook for SoftBank in March, citing risks stemming from the OpenAI bet. Questions have also arisen about OpenAI’s user and revenue metrics, its competitive position, governance, and spending commitments.
Key points
- SoftBank posted a net profit attributable of 1.829 trillion yen for the quarter ended March 31, a sharp improvement from 517.18 billion yen a year earlier.
- The profit surge was mainly due to a revaluation of SoftBank’s OpenAI investment, valued at $79.6 billion at end-March, marking a $45 billion cumulative gain on the initial investment.
- Financial markets and sectors affected include technology and finance - specifically private AI investments, chip-sector holdings previously sold by SoftBank, and credit markets tied to the loans used to finance the OpenAI stake.
Risks and uncertainties
- Liquidity and credit risk - SoftBank still has $17.5 billion outstanding on a $40 billion bridge loan taken to finance the OpenAI investment, raising concerns about asset liquidity and financial capacity.
- Operational and market risk for OpenAI - reports indicate OpenAI missed internal targets for weekly users and revenue, and competition from firms such as Anthropic and Google may pressure its market position.
- Governance and capital commitments - scrutiny over OpenAI’s governance and a reported roughly $600 billion commitment to data-center infrastructure spending are uncertainties, particularly against reports of a potential IPO later this year.