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SoftBank stock rebounded on Wednesday after an 8.5% plunge a day earlier, as investors returned to one of Asia’s biggest artificial intelligence bets.
The stock rose 2.2% in Tokyo after falling to 5,310 yen on Tuesday. SoftBank is still 38% below its June record, while its backing of OpenAI has reached $64.6 billion.
The group has raised $11 billion through a record high-yield bond sale to help fund its AI strategy.
Tuesday’s plunge may have gone too far
SoftBank’s sell-off came as AI stocks were hit by concerns over valuations, Chinese competition and whether heavy artificial intelligence spending will generate adequate returns.
That makes Tuesday’s 8.5% fall look partly like a broader positioning washout rather than a company-specific shock.
Mizuho analyst Daniel O’Regan told Barron’s there was not “one smoking gun” behind the AI sell-off, but rather a combination of weak memory and optical stocks, negative headlines and investors reducing risk after a strong run.
SoftBank had already fallen sharply before Tuesday, as the shares were down 38% from their June peak.
SoftBank’s AI concentration is also its bull case
SoftBank’s growing AI exposure is both its biggest vulnerability and the reason some investors still see significant upside.
The group’s OpenAI backing now totals $64.6 billion, while holdings such as Arm and SB Energy increasingly tie its valuation to the wider AI build-out.
Morningstar senior equity analyst Dan Baker told Reuters that SoftBank’s valuation effectively assumes a major AI-driven transformation of work.
“If that goes ahead, it’s hard to see their investments not being very successful,” Baker said.
That is the core contradiction, as investors buying SoftBank are not necessarily ignoring concentration risk. Some are buying because that concentration creates large upside if OpenAI and related infrastructure investments keep appreciating.
SoftBank Investment Advisers CEO Alex Clavel said the group borrowed partly because it did not want to sell assets it believes will keep rising in value.
Expensive debt raises the hurdle for Son’s strategy
The risk is that SoftBank’s funding costs are rising alongside its AI exposure.
Its latest $11 billion bond sale included debt yielding as much as 9.75%, compared with 5.2% on a similarly dated Alphabet bond. SoftBank’s credit-default-swap spreads have also climbed since June.
That means its AI assets need to generate returns large enough to compensate for both concentration and expensive financing.
MST Financial analyst David Gibson told Reuters that SoftBank’s strategy has become binary, likening it to betting on red or black rather than spreading bets widely.
SoftBank’s rebound does not mean investors have stopped worrying about its AI exposure. It suggests some now believe the 38% drawdown has made the potential OpenAI payoff attractive again.
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