SoftBank Wrote Off $3.7 Billion in Turbines Days After Denying Musk's Default Claim

SoftBank booked a loss of 597.2 billion yen, about $3.7 billion, on power generation equipment it has decided not to take — in the same results where its finance chief denied Elon Musk's claim of a turbine default.

Chief financial officer Yoshimitsu Goto told analysts in Tokyo on Tuesday, November 10, that Musk's post was wrong. In The Wall Street Journal's translation, Goto said: "This is simply not correct at all. There is no such default."

Read together with the charge, both statements can be true at once. SoftBank says it broke no contract. It also walked away from about $2.9 billion of turbine equipment it had already paid for. Musk was onto something about the orders being scaled back, even though his word "defaulting" went further than anything SoftBank has disclosed. SoftBank calls the whole thing a procurement change, and nothing it has released contradicts that.

How did this start?

Musk started it on X. At 1:25 AM Eastern on Friday, November 6, replying to Katie Miller, he wrote: "SoftBank is defaulting on their turbine orders." He named no supplier, no contract and no amount. SoftBank's Tokyo-listed shares closed down 10.83% that day.

Four days later, at SoftBank's fiscal second-quarter briefing, an analyst put the post to Goto directly. His denial made headlines. The $3.7 billion charge in the same results did the real talking. The company says the money went to gas turbines and other gear it had paid for in advance to power its AI data centers in the United States, and that it has now changed its mind about a large share of them.

What exactly is the $3.7 billion?

The number breaks into two parts, and the bigger part is forfeited deposits.

• SoftBank prepaid $9.5 billion through September 30 to lock in manufacturing capacity and power generation equipment, expecting shortages and long lead times.
• In the quarter it decided not to take delivery of about $2.9 billion of that equipment, roughly 460 billion yen. Chief accounting officer Kazuko Kimiwada said the prepaid fees were not recovered.
• The remaining $0.8 billion came from contract changes and settlements.
• Subtract the $2.9 billion from the $9.5 billion, and $6.6 billion is still on deposit for equipment SoftBank still plans to take.

There is a partial offset, but it is slow. SoftBank says it can claim up to $2.1 billion of rebates on future purchases over 10 years. Spread evenly, that is $210 million a year. It only arrives if SoftBank keeps buying from the same suppliers. At most it recovers 72% of the forgone deposits, and only over a decade.

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

The quarter was brutal beyond the turbines. SoftBank posted a net loss of 1.12 trillion yen, about $7.1 billion — its first loss in almost two years — against the 129 billion yen profit analysts had expected. That is a 1.25 trillion yen swing from the forecast.

Why did GE Vernova feel nothing?

GE Vernova told the Journal the moves had "no negative or positive impact" on it. Its numbers, reported October 28, explain why.

• Total backlog: $197 billion.
• Gas power equipment in backlog: 64 gigawatts, plus another 58 gigawatts under slot reservation agreements — 122 gigawatts in all.
• The company expects at least 130 gigawatts under contract by the end of 2026.
• Its board raised the share buyback authorization to $20 billion in October.

Against that book, 13 gigawatts is about 11%. And SoftBank is still taking the equipment behind the other $6.6 billion. A reservation fee is paid to hold a place in the manufacturing line. When the customer gives the place up, the fee stays with the manufacturer and the slot can be sold to the next buyer in line. That is why a $2.9 billion write-off at the customer shows up as nothing at the supplier.

The stock told the same story in two halves. GE Vernova fell 3.9% to $797.04 on Tuesday, the day SoftBank's results reached U.S. trading. It closed at $808.24 on Wednesday and traded around $836 by 11:10 AM Eastern on Thursday, up 3.4% on the day. It remains 28.8% below its record close of $1,174.86 on June 30, and 9% below its close on November 3, before the week of Musk's post. SoftBank's over-the-counter ADR last closed at $12.49 on Wednesday.

Who actually holds this risk?

Consider a 67-year-old retired GE engineer with 400 GE shares at the April 2, 2024 split-up. The spin-off gave him one GE Vernova share for every four GE shares: 100 shares that closed at $140.00 on day one, worth $14,000. At the June 30 record close those shares were worth $117,486. At Wednesday's close, $80,824. At Thursday's price, $83,594. SoftBank's results day cost him $3,230 on Tuesday; Thursday's bounce gave back $2,770. He is $33,892 below the June peak — and still holds a stock worth six times its first-day value.

He also owns it a second time without knowing it. GE Vernova has been in the S&P 500 since the spin-off, so every S&P 500 index fund in his IRA holds a sliver, and so does every retiree's who never thought about turbines.

The source works through the tax arithmetic for trimming the position. On a $140 basis, the 100 shares carry an unrealized gain of $69,594. If he and his wife have 2026 taxable income under $613,700, the federal rate on a long-term gain is 15% under IRS Revenue Procedure 2025-32, so selling everything would cost $10,439 in federal tax. Selling 25 shares at Thursday's price raises $20,898, realizes a gain of $17,398 and costs $2,610 at 15% — or $3,271 if their modified adjusted gross income exceeds $250,000 and the 3.8% net investment income tax applies. That leaves 75 shares worth $62,695, in a position that no longer rides on whether the next AI builder keeps its turbine slots.

What does this say about the AI power buildout?

The plain reading: the buildout is real, and so is the over-ordering. A single buyer paid $9.5 billion ahead of time to hold places in line for turbines, found it had reserved more than its projects could use, and paid about $2.9 billion to walk away from the excess. The fees were nonrefundable, the cash stayed with the makers, and GE Vernova's gas book grew in the same quarter.

For a GE Vernova holder, or a utility building plants for the same data centers, the lesson is that this demand is being booked by a handful of AI builders who can change their plans in one quarter — and when one does, the manufacturer keeps the deposit while the buyer's shareholder eats the loss.

The limit of that reading: it is one customer's change, the supplier says it felt nothing, and the one public claim of a default came from Musk, who named no contract. SoftBank's own word for it is a procurement change.

Both things are true. SoftBank says no contract was broken, and the orders were cut. GE Vernova kept the money and its backlog, which is why it is up on Thursday and a retiree holding 100 spin-off shares is worth $83,594 instead of the $80,824 he was worth on Wednesday night. The turbine buildout is being paid for by a few deep-pocketed buyers — and this is what it looks like when one of them changes its mind.