SoftBank Stock Crashes 12.5% as $500 Billion Stargate AI Project Stalls
SoftBank shares plunged 12.5% last week, hitting their lowest level since August 2025, as the company's massive AI infrastructure bets face mounting problems. The $500 billion Stargate data center project — announced with great fanfare by President Trump in January 2025 — is reportedly stalling over unresolved disputes between partners OpenAI, Oracle, and SoftBank.
What's Going Wrong With Stargate?
More than a year after the announcement, the Stargate joint venture hasn't hired staff and isn't actively developing data centers, according to The Information. The three partners have been arguing over responsibilities and how the collaboration should be structured — disagreements that were already surfacing last summer.
The timeline of failures tells the story:
OpenAI tried to go solo — and failed. After the partner disputes, OpenAI attempted to build its own data centers but couldn't secure financing. Lenders weren't willing to back billion-dollar infrastructure projects from a company with an unproven business model and heavy losses.
The three-way deal became two-way. After hitting that financing wall, OpenAI went back to its Stargate partners. But the renewed partnership is now a two-way deal between Oracle and OpenAI, with SoftBank's role restructured. Oracle and OpenAI split economic risk: both cover cost overruns and both benefit from savings.
OpenAI missed its capacity goals. The company fell short of its target to lock down 10 GW of data center capacity commitments through SoftBank and Oracle by end of last year. To cover computing needs, OpenAI cut deals with Amazon Web Services, Google Cloud, AMD, and chip startup Cerebras.
SoftBank's Financial Pressure
The stock crash isn't happening in isolation. S&P revised SoftBank's credit outlook to negative on March 3, citing concerns about the company's aggressive AI spending. SoftBank's credit default swap spreads widened to 380 basis points — a significant jump that signals growing market anxiety about the company's financial health.
And SoftBank isn't pulling back. The company has committed an additional $30 billion investment in OpenAI, doubling down on its AI bet even as the infrastructure to support that bet crumbles. CEO Masayoshi Son has staked his reputation on the AI supercycle thesis, but investors are starting to question whether the execution can match the vision.
Not All Bad News
Despite the turmoil, some progress is being made. Ground was broken on a 1-gigawatt Stargate campus in Milam County, Texas in October. OpenAI and SoftBank reached a compromise where OpenAI signs the long-term lease and controls facility design, while SoftBank's subsidiary SoftBank Energy develops and owns the project.
OpenAI CFO Sarah Friar has also said the company is deliberately working with cloud partners to protect its balance sheet — a pragmatic approach even if it means the original Stargate vision of fully owned infrastructure is effectively dead.
The Bottom Line
The Stargate project was supposed to be the crown jewel of America's AI infrastructure buildout — a $500 billion commitment that would cement US leadership in artificial intelligence. Instead, it's become a case study in how even the most ambitious AI plans can founder on basic business problems: partner disputes, financing gaps, and execution failures. SoftBank investors are paying the price, and the question now is whether Masayoshi Son's latest mega-bet will follow the pattern of his Vision Fund era — massive commitments followed by painful write-downs.