On February 12, Japan$SoftBank Group (9984.JP)$released the Earnings Reports for the fourth quarter of 2024. Due to the decline in the valuation of the Vision Fund's investment portfolio, SoftBank Group unexpectedly recorded a loss of 369.2 billion yen (approximately 17.6 billion yuan). The losses experienced by SoftBank Group have raised concerns in the market about its ability to invest in both OpenAI and the "Interstellar Gateway" projects simultaneously.

Due to early investments$Alibaba (BABA.US)$and earning hundreds of billions of dollars, SoftBank Group and its founder Masayoshi Son are well-known in the domestic market. The group mainly operates six Business segments, with the Vision Fund primarily responsible for venture capital operations, managing over 110 billion dollars.

In the fourth quarter of 2024, the Vision Fund recorded an investment loss of 352.75 billion yen in a single quarter. Among these, the fair value of the portfolio companies of the first phase of the Vision Fund declined by 2.8% compared to the end of the previous quarter, and the fair value of the second phase of the Vision Fund declined by 3.7%. The losses of the Vision Fund mainly originated from significant declines in the stock prices of publicly traded companies such as Auto Manufacturers and warehouse automation company AutoStore.

The Earnings Reports also show that since its establishment in 2017, the first phase of SoftBank's Vision Fund has achieved a total revenue of 21.6 billion dollars, while the second phase, which covers a large number of early-stage startups, has incurred losses of 22.2 billion dollars since 2019.

The volatility in the quarterly performance of the Fund has been a concern for SoftBank. In the second quarter of 2022, the Fund recorded a historical single-quarter investment loss of up to 2.93 trillion yen. In the second and third quarters of 2024, the Fund has achieved profitability for two consecutive quarters.

The recent loss in the Fund casts a shadow over SoftBank Group's prospects for investing in 'Stargate' and participating in the new round of financing for OpenAI.

On January 21, the current president of the USA, Trump, announced the launch of a massive AI infrastructure plan called 'Stargate', with a total investment of 500 billion dollars. SoftBank announced it would partner with OpenAI,$Oracle (ORCL.US)$and MGX to invest 100 billion dollars in the initial phase of the Stargate project. Reports indicate that SoftBank may need to contribute 15 billion dollars.

On the day the Earnings Reports were released, SoftBank Group's Chief Financial Officer Yoshimitsu Goto stated that 'Stargate' would primarily be financed through project equity financing, and the investment in this project would not affect the group's financial discipline. He also promised to increase the fundraising for the second phase of the Fund by 5 billion dollars to 65.8 billion dollars.

While investing in 'Stargate', SoftBank Group is also set to complete a massive 40 billion dollar investment in OpenAI. This financing will break the previous single-round financing record set by OpenAI in Silicon Valley. After this round of financing, not only will OpenAI's post-investment valuation double compared to the previous round to reach 300 billion dollars, but SoftBank will also surpass$Microsoft (MSFT.US)$To become the largest investor in OpenAI.

In addition, SoftBank has committed to spending 3 billion dollars annually on OpenAI's technology. The two companies also announced the establishment of a new joint venture called “SB OpenAI Japan,” which will specifically market OpenAI's enterprise technology to large companies in Japan.

Editor/rice