SoftBank’s billion-dollar loss may have put a cap on AI’s natural gas ambitions

Résumé détaillé

SoftBank lost over $3 billion pre-ordering natural gas turbines to power AI data centers. Here's what the loss means to power markets.

SoftBank might not be the first to invest in a hot trend, but when it does, it goes big.

Witness its $30 billion bet on OpenAI in early 2025 or its announcement in February that its SB Energy subsidiary would spend $33 billion on a 9.2-gigawatt natural gas power plant. If you can’t be first, be biggest, I guess.

That philosophy apparently spilled over into procurement, where orders were also supersized. Starting about two years ago, SoftBank reportedly put down deposits on more than 13 gigawatts of turbines, almost 50% more than it needed.

The decision to over-order undoubtedly helped secure turbines and speed up SoftBank’s projects.

“SB Energy did not have a choice except to overbook turbines in the future if they wanted some turbines right away,” Peter Gardett, CEO of Noreva, told TechCrunch via email.

The energy world was caught off guard by the swiftness and magnitude of AI’s rising power demands. Queues for turbine orders now extend into the early 2030s. As natural gas was shaping up to be a go-to power source for the AI boom, CEO Masayoshi Son bet that by deploying his investment firm’s significant war chest, he could corner a portion of the market. If the AI world wanted power for its data centers, it would have to come to him.

Now, that bet appears to have fizzled. SoftBank announced a $7.1 billion quarterly loss on Tuesday, with over half of that stemming from losses related to power-generating equipment. The investor had paid turbine manufacturers nonrefundable deposits to secure orders, and now it considered much of those worthless.

The move was also a costly bit of price discovery, Gardett said. Rather than overpay and potentially still be short of turbines, SoftBank overpaid and over-ordered.

“This charge is just that price discovery finally happening,” Gardett said.

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