SoftBank Defends Stargate Investment Amid Musk's Funding Doubts

SoftBank has defended its participation in the $500 billion Stargate investment program, pushing back against Elon Musk's public skepticism about the project's funding, as reported by Nikkei Asia.

Speaking at a press conference on Wednesday, Yoshimitsu Goto, SoftBank's chief financial officer, asserted that the company's financial commitment to Stargate will be “handled by participating lenders and equity investors.” Goto emphasized that the initial members of Stargate, including SoftBank, will fund only a fraction of the total project costs, typically 10% to 20%.

“It’s not like we will spend tens of trillions of yen of our own assets or cash,” Goto stated, seeking to alleviate concerns about the financial burden on SoftBank. He added that Stargate investments in areas such as data centers and electricity facilities will be structured as smaller projects with external funding playing a significant role.

Goto's remarks come in response to public comments made by Musk, who questioned Stargate's funding in a January post on X. Musk's skepticism likely stems from his ongoing legal battle with OpenAI CEO Sam Altman, involving past funding provided by Musk to OpenAI. A consortium led by Musk recently offered $97.4 billion to purchase the nonprofit that controls OpenAI, an offer Altman promptly rejected.

While avoiding direct criticism of Musk, Goto acknowledged the competitive dynamic between OpenAI and Musk's own AI company, xAI, stating that Musk "has to nurture his own AI vehicle, making it a competitor."

Goto also outlined Stargate's ambitious investment timeline, stating the initiative aims to invest $100 billion this year, with a goal of reaching $500 billion in total investment over the next four years.

The defense of Stargate's funding coincides with SoftBank's announcement of a ¥369.1 billion ($2.4 billion) net loss for the third quarter ending in December. This significant loss, a reversal from the previous quarter's ¥1.1 trillion profit, was attributed to underperformance in the company's flagship Vision Fund, particularly investments in technology companies such as South Korea's Coupang and India's Ola Electric Mobility. Despite this, the Vision Fund is adopting a more defensive investment strategy and has been building its cash reserves.