A cliff-like drop of 40%! SoftBank in the eye of the storm (SFTBY.US): Success due to OpenAI, failure also due to OpenAI?

Market concerns about the bubble valuation in the field of artificial intelligence continue to ferment, and this unease is weighing heavily on the stock price of SoftBank Group (SFTBY.US). A consensus is forming among traders that SoftBank is seen as a "shadow target" of the non-public company OpenAI, and its stock price volatility is highly correlated with the direction of the AI industry. With the market shock triggered by the news of Alphabet Inc. Class C (GOOGL.US) launching Gemini 3.0, the competitive pressure facing OpenAI has suddenly intensified. In the global wave of selling in the artificial intelligence sector, this Japanese technology investment giant is unfortunately at the forefront. Since late October, SoftBank's stock price has plummeted dramatically, with a cumulative decline of nearly 40%, causing its market value to evaporate over 16 trillion yen (approximately $102 billion). However, in the face of such a grim situation, its founder Masayoshi Son is going against the tide, planning to further increase investment in OpenAI and its ecosystem infrastructure. However, it is precisely this deep exposure to the AI industry that has enabled SoftBank to quickly enter the global AI investment wave far beyond its Japanese peers. Its equity exposure to OpenAIand the $14.6 billion unrealized gains from this investmenthas become a key driver of the second-quarter performance explosion, boosting net profit to 2.5 trillion yen for the quarter, potentially making it one of the highest annual profits in the company's history. However, this deep integration also brings a dual nature: when SoftBank deeply ties billions of dollars of capital to OpenAI's leading position, any movement suggesting a change in "AI dominance" could lead to stormy fluctuations in its stock price. This round of steep declines has put SoftBank founder Masayoshi Son's aggressive strategy under the spotlight. He is preparing to double down on OpenAI and its supportive infrastructure, trying to position SoftBank as a core participant in the AI ecosystem led by OpenAI. However, the market's strong reaction suggests that investors are reassessing the risks and rewards of this gamble. Behind SoftBank's strategic gamble: a $6.5 billion acquisition of Ampere, facing disruptive challenges from RISC-V On Wednesday, SoftBank's stock price surged 8% in the Japanese stock market trading, after the company officially announced the completion of its $6.5 billion acquisition of the American chip design company Ampere Computing LLC. However, this technology investment giant still faces dual financial pressure: on one hand, it needs to pay $2.25 billion to OpenAI in December (part of its promised $32 billion investment), and on the other hand, it needs to raise funds for a proposed $5.4 billion acquisition of ABB Ltd.'s Siasun Robot & Automation division. Market concerns about the bubble valuation of artificial intelligence companies continue to escalate. Earlier this month, when asked if the industry is in an AI bubble, Yoshimitsu Goto, chief financial officer who has experienced multiple technology cycle fluctuations, candidly stated, "Whether it's a bubble or not, it can only be judged afterwards." This statement reflects the cautious attitude of management towards the current valuation system. In response, analysts Craig Boudre and Chris Muckentrum pointed out that the recent sharp fluctuations in SoftBank's stock price more reflect its sensitivity to OpenAI than overall weakness in the AI marketat least in the short term. Since Alphabet Inc. Class C released the well-received Gemini 3.0 model last week, SoftBank's stock price has dropped by 24% overall, intensifying market concerns about whether OpenAI's growth targets will be impacted by competition. If the December investment is completed as planned and OpenAI is valued at $500 billion, SoftBank's stake will account for more than 20% of its net asset value. Expectations that previously drove the stock price higher in August and October are now facing reversal pressure. Masayoshi Son is reshaping SoftBank's technological landscape with a strategic gamblethe core goal is to establish the group as a key player in the "OpenAI-led AI ecosystem" Hub Group, Inc. Class A. To raise the capital ammunition for this gamble, he has divested from NVIDIA Corporation and Oracle Corporation (ORCL.US), instead focusing on AI chip design and firmly believing that future intelligent devices will rely heavily on energy-efficient AI computing power. As a cornerstone of this strategy, SoftBank holds nearly 90% control of Arm Holdings Plc (ARM.US), a chip architecture giant whose instruction set supports modern computing from smartphones to data center servers. It is worth noting that Ampere Computing, a server chip manufacturer recently acquired by SoftBank, is a core customer of Arm architecture, forming a synergistic effect in technology closure. Amir Anvarzadeh, a Japan stock strategist at Asymmetric Advisors, warned that SoftBank's strategic decision to cross-border chip manufacturing may raise questions in the market amid the global tech giants' rush to self-develop AI chips. He pointed out, "As the industry focuses on the investment risks of OpenAI, the market is collectively ignoring a key variableRISC-V architecture is rapidly penetrating the AI chip design field, and even traditional giants like NVIDIA Corporation have begun to adopt this open-source architecture." As an open-source technology standard directly competing with Arm, RISC-V is receiving strategic attention in the Chinese market. Anvarzadeh's analysis suggests, "Driven by political risks from GEO Group Inc, RISC-V is likely to become the next core technology listed on the export control list after advanced process chips." AI investment logic changes: from "general euphoria" to "careful selection" The fluctuations in SoftBank's stock price also reflect a shift in AI investment logic. Kazunori Tatebe, Chief Strategist at Daiwa Asset Management, stated, "The phase of buying AI-related stocks indiscriminately has ended, and future screening will become more stringent." Market differentiation is becoming apparent. Reports indicate that Meta Platforms Inc. (META.US) plans to use Alphabet Inc. Class C's Gemini AI chip, which has raised concerns for NVIDIA Corporation's business and put pressure on its Japanese suppliers' stock prices. For example, Ibiden Co., the main supplier of NVIDIA Corporation's chip substrates, saw its stock price drop by about 4% this week. Meanwhile, some companies are benefiting from this. Toppan Holdings Inc. saw its stock price rise by about 11% this week, in part because the market believes the company, as a major business partner of Broadcom Inc. (AVGO.US), which is collaborating with Alphabet Inc. Class C to design AI chips, will receive positive news. Maito Yamamoto, Chief Analyst at Nissay Asset Management, believes that Japanese chip equipment manufacturers like Advantest Corp. could also benefit. This indicates that investors are shifting from chasing a single AI leader to more finely evaluating winners and losers in the entire industry chain.