SoftBank’s AI Ambitions Hit a Snag as Major Acquisition Talks Stall

SoftBank JP3436100006

Reports emerged on Monday indicating that SoftBank Group has suspended negotiations to fully acquire U.S. data center operator Switch Inc. This development has introduced uncertainty into the Japanese conglomerate's aggressive artificial intelligence infrastructure strategy, sending its shares lower.

Investors reacted negatively to the news, with SoftBank's stock declining approximately 5% in Tokyo trading. The potential acquisition of Switch, which was reportedly valued between $50 billion and $60 billion including debt, had been viewed by many as a cornerstone investment. It was seen as a critical move to secure the physical infrastructure required for SoftBank's expanding AI platform.

In response to the halted talks, SoftBank appears to be shifting its immediate focus. Instead of pursuing a complete takeover, the company is now considering a partial investment or forming a strategic partnership with Switch. A previously scheduled deal and strategy call by CEO Masayoshi Son, initially set for January, has reportedly been canceled.

Implications for the "Stargate" Project

This pause directly impacts the momentum of SoftBank's ambitious "Stargate" project. The initiative, with an estimated scale of around $500 billion, aims to build massive AI computing capacity in the United States in collaboration with partners like OpenAI and Oracle. Gaining control over Switch's energy-efficient data centers was a key component of the plan to meet the substantial computational demands of these partnerships.

Despite this setback, SoftBank continues to push forward with its broader AI offensive. Recent moves underscore this commitment:
* The conglomerate recently invested $22.5 billion to increase its stake in OpenAI to 11%.
* On January 21, SoftBank Corp. introduced "Infrinia AI Cloud OS," a software platform designed to optimize next-generation data centers.

These actions signal a temporary strategic reorientation from large-scale infrastructure deals toward strategic stakes and complementary software solutions.

Portfolio Activity Continues Apace

Alongside its AI infrastructure plans, SoftBank's broader investment portfolio remains active. For instance, Patsnap, a SaaS provider backed by SoftBank, is reportedly considering a dual listing in Hong Kong and Singapore. The intellectual property analytics software company aims to raise between $300 million and $400 million from the capital markets.

This activity highlights that SoftBank continues to develop its holdings and prepare exit opportunities for portfolio companies, even as it navigates its core AI strategy.

Key Facts at a Glance

• Switch Inc.: Talks for a full acquisition are paused; focus shifted to a partial investment or partnership.
• Deal Size: Planned valuation was approximately $50 billion, including debt.
• OpenAI Stake: Investment increased to 11% with a total commitment of $22.5 billion.
• New Product: "Infrinia AI Cloud OS" launched on January 21.
• Share Price: SoftBank shares in Tokyo fell roughly 5% following the reports.

Upcoming Catalyst: Quarterly Earnings

The upcoming earnings presentation will be crucial for understanding the future direction of SoftBank's strategy. The company is scheduled to report its third-quarter results for the fiscal year 2025 on February 9. Market attention will center on:
* The performance of the Vision Fund investment portfolio.
* Concrete details on the revised structure of the "Stargate" infrastructure plans, particularly the balance between partnerships and outright acquisitions.

These figures and management commentary will provide significant insight into how SoftBank intends to allocate capital across major infrastructure projects, strategic stakes like OpenAI, and its remaining portfolio investments.