SoftBank's Fourth Quarter Loss Signals Persistent Challenges for Vision Fund

SoftBank Group has reported a projected net loss of ¥26.9 billion ($184 million) for its fourth quarter of fiscal year 2024, marking a stark contrast to the ¥231 billion net income recorded in the same period last year. The decline underscores the ongoing struggles of its Vision Fund, which faces mounting losses amid a volatile tech landscape and shifting investor sentiment. While the telecom division, led by T-Mobile, provided some relief, SoftBank’s aggressive bets on AI and semiconductors—most notably its record-breaking investment in OpenAI—highlight both ambition and risk as the company navigates a pivotal moment in its strategic evolution.

The Vision Fund’s Struggles

The Vision Fund’s fourth-quarter performance was weighed down by underperforming early-stage startups and widening losses at key portfolio companies. Swiggy and Ola Electric, two Indian unicorns that went public in 2023, saw their shares plummet nearly 40% amid intensified competition in quick commerce and electric vehicles. Analysts estimate the Vision Fund’s investment vehicles (SVF1, SVF2, and LatAm Funds) collectively lost around $900 million during the quarter.

This reflects broader challenges in venture capital markets, where capital has shifted toward established firms rather than risky early-stage ventures. Crunchbase data shows Q4 2024 had the lowest level of early-stage investment in five quarters—a trend that could further strain SoftBank’s Vision Fund 2, which has 60% of its portfolio in late-stage private companies.

Telecom Resilience and the AI Pivot

SoftBank’s telecommunications division, particularly its stake in T-Mobile US (post-Sprint merger), provided a rare bright spot. T-Mobile’s shares rose over 20% during the quarter, nearing record highs, driven by strong subscriber growth and 5G expansion. This resilience highlights the stability of SoftBank’s core operations, which remain a critical counterbalance to the volatility of its tech investments.

Yet SoftBank’s future hinges on its high-stakes pivot to AI. The company committed $20–$30 billion to OpenAI, developer of ChatGPT, and acquired chipmaker Ampere Computing for $6.5 billion—moves that aim to secure a foothold in the AI infrastructure stack. However, analysts like Amir Anvarzadeh of Asymmetric Investors caution that these investments face fierce competition and unclear monetization paths. “SoftBank may have overpaid for AI assets without a clear strategy for profitability,” he noted, pointing to a crowded market of chatbot developers.

Geopolitical Crosscurrents and IPO Delays

SoftBank’s portfolio faces additional headwinds. U.S. tariff policies delayed IPOs for Klarna and Oyo, both SoftBank subsidiaries, further depressing valuations of unlisted holdings. Conversely, PayPay’s planned IPO offers a glimmer of hope, though macroeconomic uncertainty looms large. Meanwhile, SoftBank’s $4.7 trillion cash buffer and the soaring valuation of its semiconductor subsidiary Arm Holdings—up to $125 per share, double its IPO price—provide a financial cushion and strategic anchor.

Conclusion: A Tightrope Walk Between Vision and Reality

SoftBank’s Q4 results paint a mixed picture. While the Vision Fund’s losses narrowed to ¥167 billion for fiscal 2023 (down from ¥5 trillion in 2022), its long-term bets on AI and semiconductors remain unproven. CEO Masayoshi Son’s vision of achieving artificial general intelligence (AGI) within a decade hinges on Arm’s dominance in semiconductor IP and partnerships with cloud giants like Amazon and Microsoft.

The numbers tell a story of resilience but also caution. A net asset value (NAV) of ¥27.8 trillion, driven by Arm’s success, contrasts with persistent losses in high-risk ventures. With a cash reserve of ¥4.7 trillion and a disciplined risk approach (evidenced by an 8.4% loan-to-value ratio), SoftBank has the tools to weather short-term turbulence. Yet investors must weigh whether the company’s ambitious AI strategy—still years from payoff—can justify its valuation.

For now, SoftBank’s fate remains tied to the success of its core telecom assets and the execution of its bold, long-term vision. The path forward is clear: control the AGI stack, ride T-Mobile’s growth, and hope that patience pays off in the race for the next tech revolution.