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The son of Softbank founder Masayoshi is known for chasing after the next big thing. Some of his big bets on high-tech companies such as Alibaba and Arm have paid off. There were also expensive flops such as office share provider WeWork. A bet on your son is a bet on an investment strategy driven by a conviction as much as its core values.
Now, his son is still making his most ambitious bet on artificial intelligence. Relying on high upfront investment demands, uncertain future returns, and proper horse support, AI is quickly raising his son’s streets.
SoftBank’s latest revenue highlights the challenges. The company fell to a loss of 369.2 billion yen ($2.4 billion) from quarter to December, but it had no forecasts for analysts’ net profit compared to its 900 billion yen profit in the same period last year. Vision Funds’ 35.27 billion yen loss highlights the volatility of its technology-heavy portfolio and could raise concerns from Stargate, the latest gambling financial logic.
The $500 million AI infrastructure initiative (essentially a huge collection of data centers) is the most attention-grabbing attempt by my son to establish SoftBank as a candidate for the AI revolution. Success can open up a favorable and stable revenue stream in cloud computing, AI model training and licensing.
However, there is a challenge. Participation in the AI infrastructure sector is capital-intensive, with a long development cycle and competition between Amazon and Google. This means that rivals can secure dominant market share before Stargate reaches scale. It also means that costs come first, but revenue may not be a meaningful boost until the infrastructure is fully operational.
The good news is that my son is taking this risk and approaching betting with a more measured approach. Unlike WeWork, where SoftBank assumes much of the financial burden, Stargate is constituted through project finance, with external investors guaranteeing the majority of the risk. SoftBank contributes to the equity portion (which is likely to range from about 10% to 20%) while limiting direct exposure while maintaining a strategic foothold in the latest advancements in the AI sector.
The stock has risen by more than 50% from its August low, reflecting his son’s new hopes for an AI-driven strategy. On Wednesday, SoftBank said it could run its first Stargate project within this fiscal year, and accelerate its timeline to generate revenue for its AI infrastructure. For now, the market is giving son the bounty of doubt, but in the AI high-stakes world, SoftBank needs to provide concrete revenue quickly.
june.yoon@ft.com
