SoftBank's AI Expansion Confronts Legal and Financial Crosswinds

SoftBank's $40B AI funding push faces credit downgrade and a major US data center project is threatened by Ohio legal challenges and a Supreme Court ruling.

SoftBank Group's aggressive push into artificial intelligence infrastructure is hitting turbulence on multiple fronts. While Chairman Masayoshi Son is centralizing strategic control around Arm CEO Rene Haas, a flagship U.S. data center project faces mounting legal challenges that threaten its viability and are already spooking investors.

The Japanese conglomerate is navigating a complex financial landscape to fund its ambitions. Reports indicate SoftBank is considering raising up to $40 billion in the loan market, a move that would potentially be the largest dollar-denominated loan in the company's history, primarily to finance its investment in OpenAI. Concurrently, its listed subsidiary SoftBank Corp. has begun investor meetings in Asia and Europe for its inaugural euro-denominated bond, with tranches of six and ten years.

This aggressive financing strategy has drawn scrutiny from credit rating agencies. S&P Global Ratings recently revised its outlook on SoftBank Group to negative, citing the growing reliance on OpenAI and the increasing funding needs. The financial strain comes as SoftBank has shifted 60 percent of its assets into AI-related investments.

Operationally, Son is placing greater emphasis on Arm, the chip design company SoftBank owns. According to a Financial Times report, Arm CEO Rene Haas is set to take on a senior role within SoftBank Group International, overseeing a significant portion of the group's international business while retaining his position at the chip firm. This move underscores Arm's centrality to SoftBank's AI offensive, highlighted by the company's recent launch of a new AI data center chip expected to generate billions in revenue.

However, a cornerstone of this infrastructure build-out is now at risk. In Ohio, a local citizen initiative is gathering signatures for a constitutional amendment that would impose a strict construction ban on data centers with a peak load exceeding 25 megawatts. They need approximately 413,000 valid signatures by July 1. This directly threatens SB Energy's planned "Piketon AI Data Center Complex," which is designed to eventually reach a colossal 10 gigawatts—more than half of the entire current U.S. data center capacity at a single site.

Simultaneously, a dispute over electricity tariffs is before the Ohio Supreme Court. A new rate aims to prevent private households from subsidizing grid costs for large data centers, requiring major consumers to pay for at least 85 percent of their committed capacity for twelve years. Industry groups are challenging this rule as discriminatory.

The legal foundation for the entire project has been further undermined by a U.S. Supreme Court ruling in February 2026, which struck down a tariff program the U.S. government used as leverage in trade agreements. This specific program formed the diplomatic framework for Japan's $550 billion investment pledge in the U.S., which includes the Ohio complex. The first phase of the data center alone carries an estimated price tag of $30 to $40 billion.

The combined strategic uncertainty is impacting investor sentiment. The Hennessy Japan Fund recently slashed its position in SoftBank Group by over 41 percent. The stock has reflected this nervousness, declining roughly 16 percent since the start of the year.

All eyes are now on the company's annual results, scheduled for release on May 13. Management will be pressed to detail how the Ohio legal hurdles affect financial planning and to provide a clear strategic response to potential delays in this flagship American project. As SoftBank doubles down on its AI bet by empowering Arm's leadership, the path forward is increasingly fraught with both financial and regulatory obstacles.