Plummeting 40%! SoftBank becomes the barometer for the "OpenAI chain"

As investor concerns about the overvaluation of artificial intelligence intensify and new variables emerge in the competitive landscape, the stock price of SoftBank Group has become a key indicator of market confidence in the non-public company OpenAI. This close linkage is costing the Japanese investment giant dearly for its massive bets in the AI sector.

Since the end of October, SoftBank's stock price has plummeted about 40% from its peak, with a market value evaporating by over 16 trillion yen (approximately 102 billion USD). The core catalyst for this round of sell-off is the market's unease regarding the competitive pressures faced by its main investment target, OpenAI, especially after Alphabet released the highly acclaimed Gemini 3.0 model.

However, it was this deep exposure to the AI industry that had recently brought significant benefits to SoftBank. With an unrealized gain of 14.6 billion USD recorded from its investment in OpenAI, SoftBank unexpectedly achieved a net profit of 2.5 trillion yen in the second fiscal quarter, at one point poised to set one of the highest annual profits in the company's history. But now, the same exposure has made it exceptionally vulnerable to fluctuations in the AI industry.

This plunge has put SoftBank founder Masayoshi Son's aggressive strategy in 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 violent reaction indicates that investors are reassessing the risks and rewards of this gamble.

Success or Failure: The Deep Tie with OpenAI

SoftBank's fate is now inextricably linked to OpenAI's valuation and market position. Analysts believe that the recent sharp decline in SoftBank's stock price reflects its sensitivity to OpenAI rather than a general weakness in the entire AI market. Since the release of Google's Gemini 3.0 last week, SoftBank's stock price has dropped 24%, highlighting market concerns that intensified competition may impact OpenAI's ambitious growth targets.

This correlation stems from SoftBank's massive financial commitments. The company still needs to pay 22.5 billion USD to OpenAI in December, which is part of its total committed investment of 32 billion USD. Analysts Kirk Boodry and Chris Muckensturm point out that if this investment is completed and OpenAI's valuation reaches 500 billion USD, SoftBank's stake would account for over 20% of its net asset value. This expectation had driven SoftBank's stock price surge between August and October, but now it has become a major reason for its stock price reversal.

Concerns about the overvaluation of AI-related companies continue to fester. Earlier this month, when asked whether there is an AI bubble in the industry, SoftBank CFO Yoshimitsu Goto admitted he could not make a judgment. This manager, who has experienced multiple cycles of boom and bust alongside Masayoshi Son, stated:

"This is something that can only be known for sure afterwards."

Gemini 3.0 launched by Google under Alphabet is seen as OpenAI's strongest competitor to date, and its positive reviews have directly raised investors' doubts about whether OpenAI can maintain its leading position.

Masayoshi Son's Big Bet: Betting on AI Chips and Infrastructure

Masayoshi Son's goal is far more than just being a financial investor in OpenAI. He is building a complete AI ecosystem through a series of mergers and investments. To this end, he has sold SoftBank's shares in NVIDIA and Oracle to raise funds.

Masayoshi Son firmly believes that future devices will require high-efficiency AI chips, which is why he is aggressively buying AI chip design companies. Currently, SoftBank holds nearly 90% of chip architecture giant Arm. Recently, SoftBank also completed the acquisition of U.S. server processor manufacturer Ampere Computing LLC for $6.5 billion, which is one of Arm's clients. Additionally, SoftBank plans to acquire ABB Ltd.'s robotics division for $5.4 billion.

However, this chip strategy is not without challenges. Amir Anvarzadeh, a Japanese equity strategist at Asymmetric Advisors, pointed out that the market has overlooked the increasing penetration of the open-source architecture RISC-V in the core design of AI chips, with even NVIDIA adopting it.

Market Differentiation: Is the Era of "Broad Gains" in AI Stocks Over?

The volatility of SoftBank's stock price also reflects a shift in AI investment logic. Kazunori Tatebe, chief strategist at Daiwa Asset Management, stated:

"The phase of indiscriminate buying of AI-related stocks has ended, and future selection will become more stringent."

The market is beginning to show clear differentiation. Reports indicate that Meta Platforms Inc. plans to use Google's Gemini AI chips, raising concerns about NVIDIA's business and putting pressure on its Japanese suppliers' stock prices. For example, Ibiden Co., a major supplier of NVIDIA chip substrates, saw its stock price drop by about 4% this week.

Meanwhile, other companies are benefiting from this shift. Toppan Holdings Inc. saw its stock price rise by about 11% this week, partly because the market believes the company, as a major business partner of Broadcom Corp. in designing AI chips in collaboration with Google, will gain advantages. Maito Yamamoto, chief analyst at Nissay Asset Management, believes that Japanese chip equipment manufacturers like Advantest Corp. may also benefit. This indicates that investors are shifting from chasing a single AI leader to more finely assessing the winners and losers across the entire industry chain