{"slug": "softbank-s-openai-funding-plans-to-face-reckoning-at-q1-earnings", "title": "SoftBank's OpenAI funding plans to face reckoning at Q1 earnings", "summary": "SoftBank Group Corp. is expected to post a net profit of 148.4 billion yen (US$941.2 million) for the April-June quarter, with analysts focused on how it will fund its over US$60 billion commitment to OpenAI and related AI infrastructure projects. The company faces US$30 billion in obligations due in the second half of 2026 and growing reliance on loans, including a US$40 billion bridging loan maturing in March 2027 and a US$20 billion margin loan on its Arm stake, while its attempt to use its OpenAI holding as collateral has stalled. S&P Global Ratings analyst Makiko Yoshimura said, \"OpenAI is very weak. It's a startup with significant AI innovation risk and lots of competition.", "body_md": "# SoftBank's OpenAI funding plans to face reckoning at Q1 earnings\n\nThe finances of AI firms face heightened scrutiny as financing needs and the use of debt grow\n\n[TOKYO] Technology investor SoftBank Group reports first quarter earnings on Thursday (Aug 6), with analysts focused on how it will fund its ongoing [investment in OpenAI](https://www.businesstimes.com.sg/companies-markets/banking-finance/softbank-books-1-83-trillion-yen-profit-openai-stake-gains) and the impact of rising leverage on its balance sheet.\n\nSoftBank has become one of the biggest backers of OpenAI and its ability to keep funding its ambitions in artificial intelligence has become a key test for the broader [AI investment boom](https://www.businesstimes.com.sg/companies-markets/mas-chief-flags-ai-investment-boom-key-risk-global-financial-stability).\n\nThe finances of AI firms are facing heightened investor scrutiny as financing needs grow and the [use of debt increases](https://www.businesstimes.com.sg/wealth/ai-running-borrowed-money).\n\nSoftBank announced record net profit in the year ended March 2026, but its share price has dropped by almost half since the start of June, and the cost to insure its debt against default has soared.\n\nSoftBank is expected to post net profit of 148.4 billion yen (US$941.2 million) over the April to June quarter, according to the average of four analysts polled by LSEG.\n\n## Balancing AI ambitions and debt\n\nUnder founder Masayoshi Son’s push to make the Japanese conglomerate a dominant investor in AI, SoftBank has committed more than US$60 billion to OpenAI and related AI infrastructure projects.\n\nHe recently dismissed talk of an AI bubble as “blasphemy” and 15 out of 20 sell-side analysts polled by LSEG had a buy or strong buy rating on the stock in August.\n\nInvestors, however, are questioning how SoftBank will fund its commitments, with US$30 billion of obligations due in the second half of 2026 and growing reliance on loans secured against its holdings.\n\nSoftBank has a US$40 billion bridging loan, but this matures in March 2027.\n\nIt has arranged a US$20 billion margin loan on its stake in chip designer Arm, but its attempt to use its OpenAI holding as collateral for another loan has been held up as lenders have become more cautious about extending credit backed by private companies.\n\n“We think Arm has a solid credit profile but OpenAI is very weak. It’s a startup with significant AI innovation risk and lots of competition,” S&P Global Ratings’ Makiko Yoshimura said.\n\nS&P raised SoftBank’s credit outlook to stable from negative in July due to the rise in Arm’s share price, which reduced the ratio of its debt to asset value.\n\nSoftBank has maintained a loan-to-value ratio below its self-imposed limit of 25 per cent in normal times [even as its OpenAI investment has grown](https://www.businesstimes.com.sg/companies-markets/banking-finance/softbank-secures-us40-billion-loan-boost-openai-investments).\n\nIt also maintains two years’ worth of bond redemptions in cash and cash equivalents.\n\n“As of March I can say our loan to value and cash position have been improving,” chief financial officer Yoshimitsu Goto said at last quarter’s earnings briefing.\n\nUnlike SoftBank, S&P’s criteria for calculating the loan-to-value ratio include margin loans backed by investee company shares, bringing its estimated ratio at the end of March to 33 per cent, compared with SoftBank’s internal figure of 17 per cent.\n\nBut the ratings agency expects this figure to have dropped to between 20 per cent and 25 per cent in June.\n\nNevertheless, some analysts highlight SoftBank’s vulnerability to further reratings of AI companies.\n\n“If Arm’s valuation drops, the value of the loan against it does not,” said Amir Anvarzadeh of Asymmetric Advisors. “A significant drop in the price of its assets could mean a liquidity squeeze,” Anvarzadeh said.\n\nFitch Ratings has identified an AI market correction as a major credit risk, citing rising valuations, the scale of AI capital expenditure and the uncertainty of AI company returns.\n\n“SoftBank, Arm and memory stocks are likely to continue to come under pressure until end users and corporates show that this is the beginning of a productivity surge,” MST Financial analyst David Gibson wrote in a note.\n\nWhile the latest AI models are becoming increasingly powerful, competition from much [cheaper and similarly effective Chinese AI models](https://www.businesstimes.com.sg/startups-tech/technology/cheaper-ai-better-soaring-bills-are-reshaping-how-businesses-choose-models) may spark a price war, hitting the margins of frontier developers such as OpenAI as well as demand for the chips powering them, analysts say.\n\nThe key question for SoftBank is whether OpenAI is able to secure funding from other parties – either through a public listing or another private round – at a higher valuation, analysts say.\n\nOpenAI is reported to be seeking an [initial public offering valuation of US$1 trillion](https://www.businesstimes.com.sg/startups-tech/openai-leans-towards-waiting-until-2027-ipo-nyt-reports), a jump from its US$852 billion valuation, although a report by *The New York Times *suggested this may be delayed to 2027.\n\nOthers are more sceptical.\n\n“The true value of OpenAI is perhaps no more than US$300 billion, judging by the smaller IPO plans of the Chinese players,” Anvarzadeh said. REUTERS\n\nDecoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.\n\nShare with us your feedback on BT's products and services\n\n[TRENDING NOW](/pulse?ref=trending-now)\n\nUOB CEO’s youngest child Grant Wee turns burnout into a wellness business\n\nTemasek Financial prices S$750 million 10-year Singapore dollar bond at 2.65% yield per annum\n\nAnalysts upbeat on ‘New Keppel’ core operations despite group’s net profit plunge\n\nGrab reports US$252 million in Q2 earnings, raises guidance for 2026", "url": "https://wpnews.pro/news/softbank-s-openai-funding-plans-to-face-reckoning-at-q1-earnings", "canonical_source": "https://www.businesstimes.com.sg/startups-tech/technology/softbanks-openai-funding-plans-face-reckoning-q1-earnings", "published_at": "2026-08-04 07:02:52+00:00", "updated_at": "2026-08-04 07:23:39.172874+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-policy", "ai-startups", "ai-infrastructure"], "entities": ["SoftBank Group Corp.", "OpenAI", "Masayoshi Son", "Arm", "S&P Global Ratings", "Makiko Yoshimura", "Fitch Ratings", "Asymmetric Advisors"], "alternates": {"html": "https://wpnews.pro/news/softbank-s-openai-funding-plans-to-face-reckoning-at-q1-earnings", "markdown": "https://wpnews.pro/news/softbank-s-openai-funding-plans-to-face-reckoning-at-q1-earnings.md", "text": "https://wpnews.pro/news/softbank-s-openai-funding-plans-to-face-reckoning-at-q1-earnings.txt", "jsonld": "https://wpnews.pro/news/softbank-s-openai-funding-plans-to-face-reckoning-at-q1-earnings.jsonld"}}