SoftBank’s $3.7 Billion Turbine Write-Off Tests Musk’s Default Claim

By Grace Kim

SoftBank booked a 597.2 billion yen charge, about $3.7 billion, after deciding not to take U.S. AI data-center power equipment it had paid for in advance.

An analyst asked CFO Yoshimitsu Goto about Musk’s post at SoftBank’s fiscal second-quarter briefing in Tokyo on Nov. 10. In The Wall Street Journal’s translation, Goto said: “This is simply not correct at all. There is no such default.”

Musk had written on X at 1:25 a.m. Eastern on Friday, Nov. 6, replying to Katie Miller: “SoftBank is defaulting on their turbine orders.” He named no supplier, contract or amount. SoftBank’s Tokyo-listed shares closed down 10.83% that day.

The two statements describe different events. SoftBank says no contract was broken and calls the decision a procurement change; its charge shows it canceled deliveries and surrendered prepaid capacity.

What does the $3.7 billion charge cover?

SoftBank had paid $9.5 billion through Sept. 30 to secure manufacturing capacity and power-generation equipment because it expected shortages and long lead times.

• About $2.9 billion, or 460 billion yen, covered equipment it would not take. Chief accounting officer Kazuko Kimiwada said the prepaid fees were not recovered.
• About $0.8 billion came from contract changes and settlements.
• The balance left $6.6 billion on deposit for equipment SoftBank still planned to accept.

SoftBank can claim up to $2.1 billion of rebates (supplier credits) on future purchases over 10 years, or $210 million annually if spread evenly. The credits require continued purchases from the same suppliers and recover at most 72% of the abandoned deposits.

The Wall Street Journal, citing people familiar with the orders, reported that SoftBank had reserved more than 13 gigawatts of gas turbines from late 2025 to early 2026, mostly from GE Vernova, then canceled reservations it could not use.

SoftBank’s quarterly net loss reached 1.12 trillion yen, about $7.1 billion, its first loss in almost two years. Analysts had expected a 129 billion yen profit, producing a 1.25 trillion yen swing from the forecast.

What did GE Vernova lose?

GE Vernova told the Journal that SoftBank’s moves had no negative or positive effect. Its Oct. 28 figures gave context:

• Total backlog (contracted-order book): $197 billion.
• Gas-power backlog: 64 GW; slot reservations (manufacturing positions): 58 GW; combined: 122 GW.
• Expected gas equipment under contract by end-2026: at least 130 GW.
• Board-authorized share buyback: $20 billion, raised in October.

GE Vernova’s gas-power book grew in the same quarter.

When a customer releases a manufacturing slot, its reservation fee stays with the manufacturer, which can sell the slot to the next buyer. The canceled 13 GW represented about 11% of GE Vernova’s 122 GW gas-power book, while SoftBank still expects the equipment tied to its remaining $6.6 billion deposit.

How did the shares react?

GE Vernova fell 3.9% to $797.04 on Tuesday, when SoftBank’s results reached U.S. trading. It closed at $808.24 Wednesday and traded around $836 at 11:10 a.m. Eastern Thursday, up 3.4% that day.

GE Vernova remained 28.8% below its June 30 record close of $1,174.86 and 9% below its Nov. 3 close, before Musk’s post. SoftBank’s over-the-counter American depositary receipt (ADR) last closed at $12.49 Wednesday.

What should shareholders do with this?

The practical answer is to manage concentration, not treat one customer’s cancellation as proof of a supplier problem. A 67-year-old retired GE engineer illustrates the exposure. He held 400 GE shares through the April 2, 2024 split-up and received 100 GE Vernova shares, one for every four GE shares.

His 100 shares closed at $140 on their first trading day, worth $14,000. They reached $117,486 at the June 30 record close, fell to $80,824 at Wednesday’s close, and rose to $83,594 at Thursday’s price.

Tuesday’s results cost him $3,230; Thursday’s rebound returned $2,770. He remains $33,892 below the June peak, but the position is worth six times its first-day value.

He owns the company twice: GE Vernova has belonged to the S&P 500 since the split-off, so every S&P 500 index fund in his individual retirement account (IRA) holds a small position.

On a $140 cost basis, his 100 shares carry an unrealized gain of $69,594. If he and his wife have 2026 taxable income below $613,700, the federal long-term capital-gains rate is 15% under IRS Revenue Procedure 2025-32. Selling all 100 would cost $10,439 in federal tax.

Trimming 25 shares at Thursday’s price raises $20,898 and realizes a $17,398 gain. Tax would be $2,610 at 15%, or $3,271 if modified adjusted gross income exceeds $250,000 and the 3.8% net investment income tax applies. The remaining 75 shares would be worth $62,695. The smaller position no longer depends on whether the next AI builder keeps its turbine slots.

The episode shows continued AI-power demand and concentrated ordering risk: one buyer reserved $9.5 billion of manufacturing capacity, then walked away from excess. A small group of deep-pocketed AI builders can change plans within a quarter; manufacturers keep the deposits, while buyers’ shareholders absorb the loss.

But the evidence stops short of a default. Only one customer changed course, GE Vernova says it felt no impact, Musk supplied no contract, and SoftBank describes the move as procurement rather than breach.

For shareholders, the change is a reminder to size turbine exposure against customer concentration and unrecoverable advance payments, not to infer that GE Vernova’s order book has weakened.