Plummeting 40%! SoftBank becomes the “OpenAI chain” bellwether

As concerns over the overvaluation of artificial intelligence by investors intensify and new variables emerge in industry competition, SoftBank Group’s stock price has become a key barometer of market confidence in the unlisted company OpenAI. This close linkage is causing the Japanese investment giant to pay the price for its hefty bets in the AI sector.

Since the end of October, SoftBank’s stock price has plummeted about 40% from its peak, wiping out more than 16 trillion yen (around $102 billion) in market value. The main catalyst for this wave of selloffs is market unease over the competitive pressure faced by its primary investment target, OpenAI, especially after Alphabet released its widely praised Gemini 3.0 model.

However, it was precisely this deep exposure to the AI industry that recently brought SoftBank huge benefits. Thanks to $14.6 billion in unrealized gains from its investment in OpenAI, SoftBank unexpectedly posted a net profit of 2.5 trillion yen in the second fiscal quarter, at one point on track to record one of its highest annual profits ever. But now, the same exposure is making the company exceptionally vulnerable to any upheaval in the AI sector.

This sharp plunge has placed SoftBank founder Masayoshi Son’s aggressive strategy under the spotlight. He is preparing to double down on OpenAI and its supporting infrastructure, attempting to position SoftBank as a core player in an AI ecosystem dominated by OpenAI. However, the market’s drastic reaction shows that investors are reassessing the risks and rewards of this bold gamble.

Success and Risk: Deep Ties to OpenAI

SoftBank’s fate is now closely intertwined with OpenAI’s valuation and market position. Analysts believe that SoftBank’s recent steep drop in share price reflects its sensitivity to OpenAI, rather than a general weakness across the AI sector. Since the release of Google’s Gemini 3.0 last week, SoftBank’s stock has fallen by 24%, highlighting investor concerns that increasing competition could impact OpenAI’s ambitious growth targets.

This correlation stems from SoftBank’s massive financial commitments. The company still needs to pay OpenAI $22.5 billion in December, part of its $32 billion total investment pledge. Analysts Kirk Boodry and Chris Muckensturm note that, assuming the investment is completed and OpenAI reaches a $500 billion valuation, SoftBank’s holding would make up more than 20% of its net asset value. This expectation drove SoftBank’s stock prices up from August to October, but it is now the main reason for its reversal.

Concerns about overvaluation of AI-related companies continue to ferment. Earlier this month, when asked whether there is an AI bubble in the industry, SoftBank’s CFO Yoshimitsu Goto admitted he could not say. The manager, who has gone through several boom and bust cycles with Masayoshi Son, commented:

“This is something only time will tell for sure.”

Alphabet’s Google launched its Gemini 3.0, regarded as OpenAI’s strongest competitor to date, and its positive reception has directly triggered investor doubts about whether OpenAI can maintain its leadership.

Masayoshi Son’s High-Stakes Bet: AI Chips and Infrastructure

Son’s ambitions go far beyond being a financial investor in OpenAI. Through a series of acquisitions and investments, he is building a complete AI ecosystem. To this end, he has sold SoftBank’s stakes in Nvidia and Oracle to raise funds.

Son firmly believes that future devices will require highly efficient AI chips, so he is buying up AI chip design companies on a large scale. Currently, SoftBank holds close to 90% of chip architecture giant Arm. Recently, SoftBank completed a $6.5 billion acquisition of U.S. server processor manufacturer Ampere Computing LLC, one of Arm's clients. In addition, SoftBank plans to acquire ABB Ltd.'s robotics division for $5.4 billion.

However, this chip strategy does not come without challenges. Amir Anvarzadeh, Japanese equity strategist at Asymmetric Advisors, pointed out that the market is overlooking the increasingly pervasive penetration of open-source architecture RISC-V in the core design of AI chips—even Nvidia is adopting it.

Market Divergence: End of "Rising Tide" for AI Concept Stocks?

SoftBank’s stock volatility also reflects a shift in AI investment logic. Kazunori Tatebe, chief strategist at Daiwa Asset Management, said:

“The indiscriminate buying phase for AI-related stocks is over; future selection will become much more stringent.”

The market is starting to show clear differentiation. Reports have emerged that Meta Platforms Inc. plans to use Google’s Gemini AI chips, which raises concerns for Nvidia’s business and puts pressure on the stock prices of its Japanese suppliers. For example, Ibiden Co., a major supplier of chip substrates to Nvidia, has seen its stock price fall by about 4% this week.

Meanwhile, other companies are benefiting. Toppan Holdings Inc. saw its stock rise about 11% this week, in part because the market believes its partnership with Broadcom Corp., designing AI chips with Google, will be advantageous. Maito Yamamoto, chief analyst at Nissay Asset Management, believes Japanese chip equipment manufacturers such as Advantest Corp. may also benefit. This indicates that investors are shifting from chasing a single AI leader to more carefully evaluating winners and losers across the entire industry chain.

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