That’s a nearly $23 billion swing. The figure I’m watching is the $10 billion SoftBank has borrowed against its OpenAI stake. First, a look at the quarter. ▪️ SoftBank recorded a $3.7 billion loss tied to changes in equipment plans for US AI data centers. ▪️ Its Vision Fund posted an ¥81.6 billion quarterly loss. ▪️ Financing costs more than doubled to $2.9 billion. ▪️ SoftBank shares are down more than 50% from their June peak. SoftBank signals it may slow its AI spending after a $7 billion loss (bearish for semis?). “It is only natural that there is some discussion now about waiting and seeing how things play out for a little while,” CFO Yoshimitsu Goto said. SoftBank also denied Elon Musk’s claim that it was defaulting on turbine orders. The broader financial question is how much room SoftBank has if the value of its collateral falls. SoftBank invested $64.6 billion in OpenAI for a roughly 13% stake, valued at nearly $100 billion at the end of September. Alongside the $10 billion borrowed against that stake, SoftBank has around $25 billion in loans backed by Arm shares. If OpenAI’s valuation falls materially, SoftBank could have to post more collateral or repay some debt, depending on the loan terms. If Arm and other tech holdings fall at the same time, raising cash could get more expensive and asset sales could add pressure to tech stocks. How much flexibility would SoftBank have if its biggest tech holdings fell together? Source. The Macro Paper

Source: zerohedge

The AI buildout was funded with cheap debt. That cheap debt is about to run out. Starting next year, data center builders have $13.4 billion of debt coming due, per BloombergNEF. Refinancing it at today's rates means paying 2.85 percentage points more in interest, adding at least $380 million in extra costs. That is just the first wave. The companies renting out AI chips, like CoreWeave and Nebius, have $49 billion due from 2030 to 2032. CoreWeave's 2032 bonds now yield above 16%, and the 10-year Treasury yield is back above 5%. So the AI industry will have to refinance hundreds of billions in debt, backed by chips that lose value every year, at the highest rates in decades. If lenders are this worried now, who is going to refinance all of this? Source: Bull Theory on X, Global Markets in X, Bloomberg