SoftBank’s $3.7 Billion Write-Down Hits GE Vernova Shares

By Nathan Brooks

SoftBank’s $3.7 billion write-down on U.S. AI data-center power equipment showed that Elon Musk was half right when he wrote that the group had “defaulted” on a gas-turbine order. The company is ordering less equipment than it previously planned, but it has not broken any contracts, SoftBank said in its second-quarter earnings on Tuesday.

Musk made the accusation in a social-media post last week. The write-down followed a revised procurement strategy at Silver Bands 7, a SoftBank subsidiary investing in infrastructure for U.S. AI data-center projects, including one in Pike County, Ohio.

SoftBank has made $9.5 billion in advance payments for power projects so far. The company disclosed two components of its charge:

• A $2.85 billion loss on non-refundable payments made to secure capacity.
• An $880 million hit related to contract modifications and settlements.

Together, those payments and contract changes turned a lower purchasing plan into an immediate accounting charge, even though no contract was broken. That distinction keeps Musk’s word “defaulted” from describing the full mechanics of SoftBank’s decision.

Silver Bands 7 is also entitled to rebates of up to $2.1 billion over the next 10 years on future equipment purchases. SoftBank said it had not yet determined the rebates, leaving the future offset undefined in Tuesday’s disclosure.

SoftBank had previously named GE Vernova as the turbine supplier for the Ohio project. GE Vernova shares fell 5% after the disclosure, and JPMorgan analysts said it was hard to delineate the precise future of the project.

What does this change for GE Vernova shareholders?

JPMorgan analysts said: “The news is a negative, as it marks a major data-center developer re-thinking its plans for power equipment.” Their assessment points to fewer planned turbine purchases, with delayed orders and deliveries potentially freeing delivery slots for other customers.

They said: “In the event that a customer delays some turbine orders / deliveries, we think it is highly likely that [GE Vernova] could use those slots for other customers, as the company is booking power orders for 2031 delivery.” That makes GE Vernova’s broader order book more important to the near-term sales trajectory.

For GE Vernova shareholders, the practical change is that a turbine order for the Ohio project has been delayed rather than canceled. Other buyers must fill those delivery slots for GE Vernova to preserve the planned volume. The Ohio project remains unresolved, and JPMorgan said its future is difficult to delineate.

SoftBank’s shares rose 14% in Tokyo trading despite the write-down. The stock was still down 29% over the previous three months.

Still, Citi viewed the power-equipment loss as negative. Analyst Keiichi Yoneshima said: “It is primarily an investment business, and its P&L fluctuates with the market environment and timing, so the quarterly P&L is not that important; however, we view the [600 billion yen] loss related to power generation equipment for U.S. AI data center as negative.”

SoftBank’s 14% gain and 29% three-month decline are consistent with Citi’s point that market conditions and investment timing carry more weight than one quarter’s profit-and-loss result. The accounting charge remains material, even if the stock reaction points elsewhere.

Musk has frequently chided SoftBank, a major investor in OpenAI. Musk, the world’s richest person, also unsuccessfully sued OpenAI this year over its transition into a for-profit structure. That dispute adds personal context to his turbine-order accusation, but it does not change SoftBank’s disclosed position: lower planned purchases, no broken contracts and a $3.7 billion charge.

The next test for GE Vernova is whether SoftBank’s delayed turbine slots move to other customers before the Ohio project takes shape. Its 2031 power-order book offers room to reallocate, but SoftBank’s revised procurement strategy leaves the eventual order mix unsettled.