Masa Son’s Stargate AI ambitions face $50B hurdle despite Trump ties

Masayoshi Son’s $50 billion plan to take over Switch has collapsed.

The SoftBank founder had been negotiating for months to buy the U.S. data center operator, hoping it would power the $500 billion Stargate AI project being launched with the Trump administration, OpenAI, Oracle, and MGX in Abu Dhabi.

That deal is now dead, according to Bloomberg’s claims. No full acquisition. No January rollout. No direct control of the energy-hungry data center network Masa was counting on to make Stargate real.

SoftBank has now pulled out of the deal completely, according to insiders, and canceled plans to announce the buyout earlier this month. Talks are still ongoing, but the new direction is smaller.

Masa is now looking at a partial investment or some sort of partnership with Switch. Nothing confirmed. The only real move this month was SoftBank’s $3 billion acquisition of DigitalBridge, a major backer of Switch. But that doesn’t get them the hardware control Masa wanted.

SoftBank team raises red flags over costs and logistics

If this deal had gone through, it would’ve been one of the biggest ever for the Japanese firm. Masa was planning to spend $100 billion instantly to set up U.S. data centers with his new partners.

The goal was to get ahead in the global AI race and control physical infrastructure, not just fund it. But internally, not everyone was sold.

Some SoftBank execs questioned how they’d actually manage massive data campuses from Las Vegas to Atlanta. They didn’t like the $50B price tag either.

Analysts Kirk Boodry and Chris Muckensturm wrote, “The end of SoftBank’s deal talks with Switch leaves its data center plans in limbo, as Stargate announcements remain few and far between.”

They added that a partial stake wouldn’t give Masa the kind of control he’s used to having in deals involving chips and physical AI systems. Basically, writing checks isn’t the same as running machines.

Switch, meanwhile, isn’t standing still. The company’s backers are now considering an IPO. They want a public listing that could push the company’s value to $60 billion, including debt.

And any deal with SoftBank could be hit by a review from the Committee on Foreign Investment in the U.S.

That would slow things down even more, especially under Trump’s second term, which has taken a tougher stance on strategic tech deals.

Masayoshi sells assets and doubles down on AI portfolio

Even though the Switch buyout collapsed, Masa isn’t backing off on AI. In the last year, SoftBank took an 11% stake in OpenAI, pumping in $22.5 billion just last month. He bought Ampere Computing for $6.5 billion, and ABB’s robotics business for another $5.4 billion.

All that money had to come from somewhere, so SoftBank dumped its Nvidia shares, sold more of its T-Mobile holdings, and jacked up margin loans using Arm stock as collateral.

But the big AI spending is already causing cracks. SoftBank’s credit is under pressure. Ratings agency S&P Global just warned that if Masa doesn’t offload some assets or restructure soon, credit scores could take a hit.

Analysts Kei Ishikawa and Makiko Yoshimura said, “If it does not take prompt easing measures, such as liquidation of held assets, pressure will intensify on the credit ratings.”

S&P added more detail in a separate report: “We will reclassify the notes as having no equity content when the period remaining to effective maturity shortens to less than 15 years, as long as our long-term issuer credit rating on SoftBank Group is in the ‘BB’ category.” That means SoftBank must maintain or refinance its hybrid securities (complex financial instruments that count as loss-absorbing capital).

S&P assumes SoftBank will do this, unless its credit score goes up and makes replacement unnecessary.

The agency also noted that SoftBank has a history of managing finances even during aggressive growth cycles, and pointed out that Masa has a clear motivation to keep the firm’s hybrid securities flowing to support its diverse funding setup. Still, without action, even a company as bold as SoftBank can get caught short.

Switch remains a target but Stargate remains stuck

So what’s next? Right now, Switch is still a target, but the door to a full takeover looks shut. Masa has been in this position before when he waited years before finally buying Arm Holdings in 2016.

There’s still talk of a possible smaller partnership, something modeled on the Ohio site SoftBank runs with Taiwan’s Hon Hai. But even that won’t give Masa the Stargate power he was chasing.

SoftBank’s been trying to ride the AI wave since the beginning. But while it invested early, it missed out on the hardware gold rush. Most of the big wins have gone to chipmakers like Nvidia and TSMC. Stargate was supposed to fix that.

The smartest crypto minds already read our newsletter. Want in? Join them.