SoftBank books a $7 billion loss after backing out of U.S. data center power orders

SoftBank Group (TSE: 9984) lost ¥1,115.3 billion ($7.0 billion) attributable to its owners in the July-September quarter, against a profit of ¥2,502.2 billion a year earlier, according to its earnings presentation. The company traced a large part of the damage to a decision to change how it buys power equipment for its U.S. AI data center projects.

The loss came from the cost of backing out of equipment orders

SoftBank's consolidated financial report says a subsidiary, Silver Bands 7, "revised its equipment procurement strategy given the evolving requirements of its existing and planned projects." SoftBank recognized a loss of ¥597,248 million ($3.73 billion) for the six months to September 30, 2026. Of that, ¥457,030 million ($2.85 billion) relates to non-refundable advance payments made to secure manufacturing capacity and buy equipment, and the rest to contract modifications and settlements.

The subsidiary's cumulative payments for this equipment since the previous fiscal year totaled ¥1,500,886 million ($9.48 billion), the report says. It also became entitled to rebates of up to $2.1 billion over the next 10 years on future equipment purchases, subject to conditions. Because the amount could not be determined at the end of September, SoftBank "did not recognize the rebate rights as an asset."

Intel shares cut both ways

The six-month results include a ¥1,062.8 billion investment gain on Intel shares. In the second quarter alone, the presentation shows an Intel valuation loss of ¥270.1 billion. In August SoftBank raised $7.4 billion through prepaid forward contracts backed by Intel shares and recorded a ¥321.9 billion derivative loss because the Intel share price rose after the contract was signed.

Six-month picture

For the six months, SoftBank reported a net loss attributable to owners of ¥768.0 billion, a deterioration of ¥3,692.1 billion from the same period of the previous year. Investment gains fell to ¥1,725.8 billion from ¥3,926.7 billion, while finance costs rose to ¥790.7 billion. Net asset value stood at ¥59.8 trillion ($380 billion) on September 30, 2026, the presentation says. SoftBank also completed its $30 billion of follow-on investments in OpenAI in October.

We would read the equipment write-off as the price of moving early

We think the quarter shows how a strategy built on capital allocation can be punished by its own timing. SoftBank paid for scarce power equipment before project financing was in place, and part of that money is now gone, while the rebates that might offset it are not yet counted. The opportunity is that the remaining balance of advance payments is still tied to projects the company says it expects to finance; the threat is that finance costs are already rising faster than investment gains.

We would watch whether the rebates are ever recognized and whether the next quarter's finance cost keeps climbing, because a company that funds data centers with debt needs gains to arrive on schedule. We expect results to stay volatile as long as they depend on the valuations of a few holdings, and our view would change if those holdings' gains stop covering interest costs.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.