SoftBank Abandons $50 Billion Switch Acquisition, Stargate AI Ambitions Face Major Hurdle
In a significant development that has sent ripples through the technology investment world, Japan's SoftBank Group has reportedly dropped its plans to acquire US data center operator Switch Inc. This decision represents a major setback for founder Masayoshi Son's ambitious vision to roll out the massive Stargate AI infrastructure project.
Months of Negotiations Come to a Halt
According to sources familiar with the matter cited by Bloomberg, SoftBank Group has halted acquisition talks with Switch Inc., a move that would have marked one of the Japanese conglomerate's largest deals to date. Masayoshi Son, Japan's second-richest man and SoftBank's visionary chairman, had reportedly pursued this transaction valued at approximately $50 billion for several months.
Stargate AI Project Loses Critical Infrastructure Component
The acquisition was strategically important because Masayoshi Son believed that direct control of Switch's extensive network of energy-efficient data centers would significantly boost the $500 billion Stargate project. This ambitious initiative, backed by former US President Donald Trump, aims to generate substantial computing power for partner OpenAI. Industry analysts had noted that the Switch deal would have provided a much-needed acceleration to the Stargate Project's data center construction plans across the United States.
"The end of SoftBank's deal talks with Switch leaves its data center plans in limbo, as Stargate announcements remain few and far between," wrote Bloomberg Intelligence analysts Kirk Boodry and Chris Muckensturm in a recent research note. They further observed that while SoftBank might pursue alternative arrangements, a strategic investment or partnership would likely fall short of the operational control the company has typically sought in areas like semiconductors and physical AI infrastructure.
From Full Acquisition to Partial Investment Discussions
Earlier this month, Masayoshi Son conceded that a complete acquisition was no longer feasible and subsequently scrapped a planned January announcement regarding the deal. Despite this setback, the two companies are said to be actively discussing alternative arrangements, potentially involving a partial investment or some form of partnership structure.
Sources indicate that some within SoftBank's leadership had expressed concerns about both the sheer size of the transaction and the logistical complexities of managing Switch's extensive data center campuses spanning from Las Vegas to Atlanta. These internal reservations may have contributed to the decision to abandon the full acquisition approach.
SoftBank's Aggressive AI Investment Strategy Continues
This development comes amid SoftBank's broader, aggressive push into artificial intelligence investments over the past year. The Tokyo-based conglomerate has:
- Acquired an 11% stake in OpenAI with a $22.5 billion investment in December 2025
- Purchased US chip designer Ampere Computing for $6.5 billion
- Announced a $5.4 billion acquisition of ABB Ltd.'s robotics division
To finance these substantial AI-focused investments, SoftBank has implemented several strategic financial moves:
- Sold down its T-Mobile US shares
- Completely divested its Nvidia stake to fund the OpenAI investment
- Lined up additional liquidity options including potential asset sales
- Planned a PayPay initial public offering
- Arranged margin loans backed by its Arm Holdings Plc stake
These financial maneuvers demonstrate SoftBank's commitment to concentrating resources on AI infrastructure projects, even as the Switch acquisition has encountered significant obstacles. The company's strategic pivot toward artificial intelligence represents one of the most substantial investment shifts in recent corporate history, with implications for global technology development and infrastructure deployment.
