Masayoshi Son has found his new WeWork—but this time, the stakes are $30 billion higher.
SoftBank Group (9984.T) is expected to report a healthy profit on Thursday, driven by paper gains on its massive investment in OpenAI. However, investor sentiment is souring as the market pivots from celebrating the valuation to scrutinizing the cost of SoftBank’s “all-in” AI strategy.
💸 THE “OPENAI PROXY” PROBLEM: SoftBank has effectively become a publicly traded tracking stock for OpenAI.
- The Exposure: SoftBank has already invested over $30 billion (approx. 11% stake) and is in talks to deploy another $30 billion in the latest round.
- The Risk: Rolf Bulk (Futurum Equities) warns: “The reality for SoftBank shareholders… is that their fortune is tied with OpenAI.” With OpenAI continuing to burn cash to compete with Google/Amazon (who spend >$100B/year on capex), the funding requirements are bottomless.
📉 SELLING WINNERS TO FEED THE BEAST: To bankroll this high-conviction bet, SoftBank is cannibalizing its liquid assets.
- Asset Sales: In the September quarter, SoftBank sold its $5.8 billion stake in Nvidia and part of its T-Mobile holdings for $9.17 billion.
- Rising Leverage: The Loan-to-Value (LTV) ratio is estimated to have jumped to 21.5% (up from 16.5%). Even a valuation mark-up of OpenAI would only slightly reduce this leverage.
💡 ANALYST TAKEAWAY: The “Masa Pattern” is repeating. SoftBank is selling high-quality, liquid compounders (Nvidia) to double down on a single, illiquid, cash-burning private entity. While the Arm Holdings stake provides some borrowing capacity ($11.5B undrawn), the margin for error is shrinking. If OpenAI loses its dominance—and analysts note its growth is now merely “on par” with competitors—SoftBank has left itself with very few exits.
👇 VCs & Allocators: Is concentrating >20% of NAV into OpenAI a visionary move, or reckless portfolio management?