FirstFT: SoftBank turns to Gulf for $100bn in AI financing

Good morning and the Nobel committee has announced that Navi Pillay, a South African human rights lawyer, has won this year’s peace prize. Here’s what else we’re covering today:

• SoftBank’s Masayoshi Son hopes to raise $100bn to finance AI bets

• Pentagon to publicly execute former army major

• The electoral battle for Ohio

• Smog casts a pall over this weekend’s Singapore Grand Prix

SoftBank founder Masayoshi Son is seeking to raise up to $100bn from Gulf investors, as he hunts for fresh financial firepower to scale up a colossal AI bet that has already made him one of the technology’s biggest champions.

Son, who was an early backer of China’s Alibaba, has held discussions in recent weeks with senior figures, including in the United Arab Emirates, over the possible fundraising, according to multiple people familiar with the matter.

The Japanese tech group’s founder would use the money to set up a fund to buy companies and then use AI to improve their operations, the people said.

Vast sums of money are being raised to pay for investments in AI-related companies and infrastructure. This week the FT reported that Elon Musk’s SpaceX was seeking to raise $40bn to purchase Nvidia chips and Pimco was among a small group of investors in talks to fund the deal.

In August, we reported that Nvidia was working with investors to assemble a funding package of more than $500bn to fund AI infrastructure development.

But there are increasing signs that investors are becoming overly dependent on the booming sector that may fall short of lofty valuations. Yesterday OpenAI said its annualised revenue was about $20bn less than the company had signalled in company documents shared with investors.

Tech stocks fell heavily after the report was published by the FT. The Nasdaq 100 closed down 1.4 per cent while Nvidia fell 2.9 per cent, Oracle dropped 5.5 per cent and Micron declined 4.8 per cent. However, futures contracts suggest stocks will open higher this morning.

In another sign of growing investor wariness, Nvidia-backed Firmus abandoned its planned IPO earlier today. The Tasmania-based data centre company had hoped to raise $5bn at a $30bn valuation in what would have been one of the largest listings this year.

Here’s what else we’re keeping tabs on today:

• Results: Delta Air Lines is expected to report record revenues as well as give details of the impact of spiralling fuel costs when it reports third-quarter results.

• Economic data: The University of Michigan’s closely watched Consumer Sentiment index will be updated for October. Canada publishes its Labour Force Survey for September.

Five more top stories

1. US benchmark borrowing costs risk hitting 6 per cent for the first time in 26 years as fears over high oil prices, inflation and America’s towering public debt roil the world’s most important bond market, Pimco’s chief investment officer has warned. Read the full interview with Dan Ivascyn.

• More on US mortgages: The 30-year fixed mortgage rate averaged 7.4 per cent as of October 8, up 0.12 percentage points from a week ago, Freddie Mac data showed yesterday.

2. The Pentagon will livestream the public execution by firing squad of former army major Nidal Malik Hasan later this year. Hasan opened fire on soldiers at Fort Hood in Texas in 2009, killing 13 and injuring 32. The US military last used the firing squad as a method of execution just after the second world war while its last death sentence was carried out by hanging in 1961.

3. SpaceX has taken a big step towards launching a Starlink mobile service for US consumers, announcing its acquisition of a low-bandwidth spectrum portfolio·. Shares of US mobile providers sank in after-hours trading following the announcement while SpaceX stock rose.

4. Exiled Venezuelan opposition leader María Corina Machado has called for presidential elections next year, even as she acknowledged “differences” with the US over the timeline for a democratic transition in a country with some of the world’s biggest oil reserves. Read the full Machado interview.

5. The White House is banning Microsoft, Adobe and several other tech companies from sponsoring workers for permanent US residency after accusing them of fraud and abusing the system in “a fundamental insult to the American worker”. The announcement marks the latest move in the Trump administration’s broad crackdown on immigration.

Manchester City, Abu Dhabi and the future of football

© Rory Griffiths/FT montage/Getty Images

The Manchester City case is viewed by some as the latest sign of a sport that has become lost in a world of money. In the wake of a damning report into the club’s financial practices last week, the UK government is seeking to protect the independence of British institutions while maintaining good relations with one of the country’s most important allies in the Arab world.

We’re also reading . . . 

• Treasury economic activism: Repeated US Treasury interventions risk an erosion of credibility, argues Mohamed El-Erian.

• Canaries in the coal mine: Gillian Tett outlines five ways investors can tell if trouble lies ahead.

• Will UBS leave Switzerland? Simon Foy in London and Mercedes Ruehl in Zurich spoke to insiders, industry executives, investors and analysts.

• Wine heist: Italy’s biggest family-owned winery says professional thieves stole 30,000 bottles of wine worth about €5mn.

Chart of the day

Ohio has voted for Trump since 2016, endorsing his pledge to end decades of decay across the upper Midwest and revive America’s industrial heartland. But the picture, since his return to office, is complex. Ohio has seen an uptick in manufacturing jobs but more broadly across the US they have declined and at the same time persistent inflation has added to business costs in the state. Democrats sense an opportunity, and Sherrod Brown, who lost his Senate seat two years ago, is ahead of his Republican rival, Senator Jon Husted. Can Democrats win back blue-collar voters? Aime Williams went to Eastlake, Ohio, and spoke to some of them.

Take a break from the news . . . 

Hundreds of thousands of Formula 1 fans are expected to descend on Singapore this weekend. But smoke from Indonesian wildfires has cast a pall over the city-state’s turn on the global stage and threatened to interfere with festivities including open-air concerts by The Killers, Janet Jackson and Lana Del Rey. Read more on the business of Formula 1 in this special report.

You can also listen to today’s top news stories in the FT News Briefing podcast.