SoftBank Group shares climbed 5% on Wednesday, extending a sharp September rally as investor enthusiasm for its artificial intelligence investments outweighed the drag from a stronger Japanese yen. The stock traded at ¥6,884 around 10:15 JST, up from ¥5,001 on September 3, a gain of nearly 38% in just over two weeks.
The move is notable because SoftBank's valuation is closely tied to overseas technology assets, including its majority stake in chip designer Arm and its significant position in OpenAI. A stronger yen reduces the yen-equivalent value of those dollar-denominated holdings, typically pressuring the stock. However, the recent surge in AI-related sentiment has more than offset that currency headwind.
AI rally powers SoftBank
The latest leg of the rally was sparked by OpenAI's launch of GPT-6 Astra, which reignited enthusiasm across Asian tech stocks. Arm, which accounts for a large portion of SoftBank's net asset value, also posted gains, adding to the positive momentum. SoftBank rose 11.8% on September 4, 11.2% on September 7, and 5.5% on September 8 before Wednesday's advance.
SoftBank operates more like an investment holding company than a traditional operating business. Its official net asset value stood at ¥72.3 trillion as of June 30, with Arm contributing ¥49.91 trillion of adjusted equity value. The company has also become one of OpenAI's most prominent backers, further tying its fortunes to the AI sector.
While a stronger yen can reduce the yen-denominated value of SoftBank's overseas assets, investors are currently looking past that drag. They believe the AI-driven appreciation of assets like Arm and OpenAI is outpacing the negative currency effect.
Yen strength driven by domestic factors
The yen traded near ¥153.3 per dollar on Wednesday, after strengthening over the past week. Market expectations for another Bank of Japan rate hike have accelerated, with the probability of a September increase rising from about 65% to 98%, according to market data. A further move by December is nearly fully priced in.
However, the reason for the yen's strength matters. MUFG strategist Michael Wan noted that the move has been driven by domestic Japanese factors, while emerging markets and carry trades have remained "very resilient." This distinction helps explain why SoftBank can rally alongside the currency. If investors are buying yen due to expectations of higher Japanese rates or domestic capital repatriation, they do not necessarily need to sell equities.
LPL Financial's Adam Turnquist told the Wall Street Journal that a break below ¥152 per dollar could accelerate the yen's rally and force more short covering.
Carry trade risks remain
The yen has long been used as a cheap funding currency for carry trades, where investors borrow yen and invest in higher-yielding assets elsewhere, including US technology stocks. When the yen strengthens and Japanese rates rise, that trade becomes less attractive. A disorderly unwind could force investors to sell dollar-denominated assets and buy yen to repay borrowings, amplifying both moves.
For SoftBank, this is a key risk because its valuation is tied to the same AI ecosystem that could be vulnerable during a deleveraging shock. The recent rally in AI-related stocks, including CoreWeave's surge on OpenAI's Astra model, highlights the sector's sensitivity to sentiment shifts. Similarly, Oracle's gains on OpenAI launch and KOSPI's jump on AI chip rally show how interconnected these markets are.
While the current environment is favorable for SoftBank, the combination of a rising yen and stretched AI valuations could create volatility if carry trade dynamics shift. Investors will be watching the Bank of Japan's next moves and the resilience of global tech markets closely.
This article is for informational purposes only and does not constitute financial advice.
