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Japanese investment giant SoftBank Group Corp. disclosed a net quarterly loss of $7.1 billion in its earnings report released Tuesday. According to TechCrunch, more than half of this loss stemmed from write-downs related to natural gas power generation equipment ordered for artificial intelligence data centers.

Starting about two years ago, SoftBank, through its subsidiary SB Energy, began placing massive orders for gas turbines. Reports indicate it paid non-refundable deposits for over 13 gigawatts of capacity, nearly 50% more than it actually needed. This strategy aimed to secure scarce turbine supplies against the surging power demands driven by AI compute growth. However, as market supply-demand dynamics shifted and actual energy consumption expectations for AI data centers adjusted, SoftBank deemed much of these prepayments worthless, leading to the significant impairment.

Peter Gardett, CEO of Noreva, noted that this loss reflects a process of "price discovery": SoftBank overpaid and over-ordered to secure turbines quickly. While AI's demand for electricity remains substantial, SoftBank's setback may signal a ceiling in the industry's blind expansion into natural gas power. Brent Nelson, Senior Managing Director at Ascend Analytics, stated that as operators better understand actual data center running requirements, grid connections paired with large battery storage might become more cost-effective choices, potentially slowing the expected development pace of the natural gas power market.