SoftBank Group Announces $500 Billion AI Infrastructure Project
SoftBank Group Corp. (SFTBY) surged 12% after unveiling a $500 billion partnership with OpenAI, Oracle Corp., and MGX. The initiative aims to establish data centers and infrastructure in the US for ChatGPT's creator.
Collaboration and Investment
The joint venture will invest $100 billion initially on infrastructure, targeting a total expenditure of $500 billion over four years. Microsoft Corp. and Nvidia Corp. will provide technology support.
Impact on SoftBank
Macquarie analyst Paul Golding emphasizes the value of SoftBank's assets and investment capabilities in the alliance. The announcement aligns with CEO Masayoshi Son's commitment to invest $100 billion in the US, primarily in AI, data centers, semiconductors, and energy.
Funding Considerations
SoftBank's stake in Arm Holdings Plc. and numerous startups may serve as financing sources for this ambitious project. Bloomberg Intelligence suggests that the investment could weaken SoftBank's loan-to-value ratio unless external funding is secured.
Reshaping Strategy
Since the Vision Fund's losses, SoftBank has prioritized AI, chips, and energy. Astris Advisory analyst Kirk Boodry views the announcement positively, anticipating a market revaluation based on SoftBank's focus on AI.