SoftBank Chases $100 Billion Gulf Fund for AI Expansion
TREE NEWS reports: Masayoshi Son, the founder of SoftBank Group, is seeking to raise as much as $100 billion from Gulf-region investors to deepen his bet on artificial intelligence. The Japanese billionaire has held talks in recent weeks with senior figures in the Gulf, including the United Arab Emirates, about the potential fundraising. The capital would be used to establish a fund that acquires companies and improves their operations through AI and other advanced technologies. SoftBank’s robotics and physical-AI unit, Roze, is expected to play a central role in that effort.
The negotiations are not guaranteed to succeed, the people cautioned. The plan lands at a delicate moment for SoftBank: OpenAI has delayed its IPO, concerns about SoftBank’s oversized AI exposure continue to build, and the company’s shares have fallen more than 30% from their June peak.
A Repeat of the Vision Fund Playbook
This is not Son’s first approach to Gulf sovereign wealth. In 2017, Abu Dhabi’s Mubadala and Saudi Arabia’s Public Investment Fund both anchored SoftBank’s first $100 billion Vision Fund. As of the end of June, Vision Fund I had generated roughly $29 billion in cumulative investment gains, while Vision Fund II — funded mainly with SoftBank’s own capital and holding a stake in OpenAI — had booked $20.5 billion in gains.
Gulf states have been pouring wealth into AI to diversify their economies away from energy. Abu Dhabi has become one of the world’s largest AI funders through vehicles including the AI-focused fund MGX and AI holding company G42. Neither company responded to requests for comment, and SoftBank declined to comment.
The AI Bet Keeps Getting Bigger
The fundraising extends a series of aggressive AI wagers, most notably a $65 billion investment in ChatGPT developer OpenAI. To finance these commitments, Son has combined equity raises with borrowing, partly secured against SoftBank’s stake in chip designer Arm and its own resources. Last month, SoftBank completed its largest-ever junk bond sale, raising more than $11 billion at yields of up to 9.75%.
SoftBank executives say short-term valuation swings at major portfolio companies such as OpenAI will not alter the firm’s investment plans. As of the end of June, SoftBank’s net asset value stood at 72.3 trillion yen, with a loan-to-value ratio of 13%, well below the 25% ceiling it targets during normal operations.
Risks Are Building Beneath the Surface
Despite the scale of the bet, external risks are accumulating. OpenAI’s annualized revenue came in roughly $20 billion below earlier signals, and SoftBank’s shares fell 5% in a single session after that news emerged. SoftBank stock is still up about 25% year-to-date, but it has dropped more than 30% from the June peak, when it briefly became Japan’s most valuable company.
Analysts argue that OpenAI’s delayed IPO could weigh on SoftBank’s plans for fresh AI investment. One Asia-based analyst warned of a “chain effect… that could deteriorate sharply in a short period” — because much of SoftBank’s exposure is directly or indirectly tied to OpenAI and the broader AI trade, meaning a sharp decline in OpenAI’s valuation could transmit losses through the group with little warning.
Son has been defiant toward skeptics, saying in July that “people who denounce AI are spitting at the sky.” He has also recently acknowledged that AI “could become extremely dangerous” if used by “bad actors.” From the WeWork bankruptcy to the spectacular returns on Alibaba, Son’s investment style has always been contentious — and this time, the market is watching closely to see whether he can once again turn a bold bet into a strategic victory.
Key Takeaways for Investors
- Watch SoftBank’s funding costs. The junk-bond raise at yields near 10% signals that lenders and bondholders are demanding a premium for AI exposure. Any further spread widening would pressure the equity story.
- Gulf capital is now a swing factor for AI. If Abu Dhabi and Riyadh commit, it validates the AI infrastructure thesis and could lift semiconductor, data-center and power names. If talks stall, sentiment around AI financing could sour.
- OpenAI’s valuation is the transmission channel. SoftBank’s NAV is increasingly a proxy for OpenAI. A repricing there would hit SoftBank shares, its bonds, Arm, and potentially the wider AI complex.
- Currency and rates matter. Large yen-denominated borrowing and dollar-denominated Gulf commitments expose SoftBank to FX swings; a stronger yen raises the real cost of its debt.
