SoftBank Merges AI Push With DigitalBridge Buyout Talks

SoftBank Group Corp. is reportedly in talks to acquire DigitalBridge Group Inc., a leading digital infrastructure company, according to reports that surfaced earlier this week. The potential transaction has drawn significant attention from investors and analysts, especially with RBC Capital upgrading its price target on DigitalBridge to $23.00 from $19.00, maintaining an Outperform rating. DigitalBridge's shares surged 45% following the news, reflecting the market's optimism around the company's future in the AI-driven data center space.

DigitalBridge's strategic focus on AI infrastructure is seen as a major draw for SoftBank, which is actively seeking growth opportunities in the artificial intelligence sector. The company has already partnered with KT Corporation to develop large-scale AI data centers in South Korea, and it recently agreed to sell its Nordic tower company, Digita Group to GI Partners. These moves highlight a broader trend in the digital infrastructure space, where companies are positioning themselves for the next phase of demand fueled by AI.

Meanwhile, C3 AI Inc. made headlines this week after receiving FedRAMP authorization, a critical step in its efforts to expand into the U.S. government market. This certification allows federal agencies to adopt C3 AI's enterprise artificial intelligence platform for sensitive applications, marking a significant milestone for the company according to reports. The move comes as C3 AI continues to navigate a challenging stock market, with shares down more than 58% over the past year despite growing demand for AI solutions.

Why the Standoff Happened

C3 AI's FedRAMP authorization is a major validation of its platform's security and compliance capabilities, which are essential for government contracts. The company now appears on the FedRAMP Marketplace, a clearinghouse for federal agencies seeking certified cloud solutions. This opens the door for C3 AI to compete more effectively with larger cloud providers in government tenders.

The authorization also follows other security certifications, including IL5 and IL6, which are lower-level authorizations for handling sensitive data. The company has emphasized its ability to provide the same AI capabilities available to commercial clients to federal customers while meeting the highest security standards. This move could position C3 AI to capture a growing share of the government AI market, which is expected to expand rapidly as agencies digitize operations.

SoftBank's interest in DigitalBridge reflects a broader strategy to capitalize on the AI-driven data center boom. With demand for computing power surging due to the rise of generative AI and large language models, data center operators are under pressure to scale infrastructure quickly. DigitalBridge's assets, including its mobile infrastructure and AI partnerships, align well with SoftBank's long-term goals of capturing value in the AI economy.

How Markets Reacted

C3 AI's shares rose nearly 1% following the announcement of its FedRAMP authorization, signaling cautious optimism from investors. However, the company still faces questions about its ability to achieve profitability. Analysts forecast a negative EPS of -$1.18 for fiscal 2026, and the company's next earnings report is expected on March 4, 2026. C3 AI has demonstrated strong liquidity, with more cash than debt on its balance sheet and a current ratio of 6.47 according to reports, but investors will be watching for signs of progress toward profitability.

DigitalBridge's stock price has also seen a dramatic move in recent days. After rising 45% following reports of SoftBank's interest, the company's valuation now appears more in line with its peer group. RBC Capital noted that DigitalBridge is currently trading at a 19.2x EV/2026E FRE multiple, significantly below the 30x–32x range seen by comparable asset management firms according to analysis. This suggests that further upside may be possible if the acquisition rumors are confirmed.

Risks to the Outlook

Despite the positive momentum, both C3 AI and DigitalBridge face significant challenges. For C3 AI, securing government contracts is only the first step. The company must now prove its ability to scale operations and maintain profitability in a competitive market. The AI sector remains highly speculative, and while government adoption could provide stability, it also brings regulatory scrutiny and long sales cycles.

DigitalBridge, meanwhile, operates in a capital-intensive industry where infrastructure costs are rising due to supply chain constraints and energy demands. While the company has taken steps to expand its AI data center partnerships, it still relies heavily on existing assets for revenue. Any delays in execution or shifts in the AI infrastructure landscape could impact its ability to grow profitably.

SoftBank's broader AI strategy is also under scrutiny. The company has been on a mission to rebuild its reputation after a string of investment setbacks and has identified AI as a key growth area. However, the AI sector is crowded, with major players including Google, Microsoft, and Amazon dominating the market. For SoftBank to succeed, it will need to leverage its unique position in infrastructure and partnerships to differentiate itself.

What This Means for Investors

Investors will need to closely monitor both C3 AI and DigitalBridge as they navigate their respective AI strategies. For C3 AI, the next major milestone is its March 2026 earnings report, which could provide insight into the company's ability to convert government certifications into revenue. DigitalBridge, on the other hand, faces the potential of a major ownership change, with SoftBank's interest raising the possibility of a takeover or joint venture.

Analysts will also be watching how the broader AI infrastructure market evolves. With companies like NextEra Energy and Exxon Mobil building large-scale data center projects, competition for high-capacity power and real estate is intensifying. Fluence Energy's stock has faced pressure from skepticism around its data center pipeline, highlighting the importance of realistic expectations in this sector.

As the AI revolution continues to unfold, the companies that succeed will be those that can adapt quickly to changing demand, secure strategic partnerships, and maintain strong balance sheets. For now, both C3 AI and DigitalBridge are in key positions, but the path to profitability remains uncertain.