SoftBank Group's stock has tumbled to its lowest level since April, extending a sharp decline that has erased nearly half its value from the year's highs. The shares dropped to ¥4,595, bringing the company's market capitalization to roughly ¥30.4 trillion. The sell-off reflects mounting pressure on the Japanese conglomerate's key AI-related investments and a broader unwinding of the artificial intelligence trade that had propelled the stock earlier in the year.
Portfolio companies under pressure
SoftBank has become a bellwether for the AI sector due to its substantial stakes in several high-profile companies. It is the largest shareholder in Arm Holdings, the chip designer now valued at over $261 billion. Arm's stock has fallen 46% from its 2024 peak, and further weakness could emerge when the company reports earnings. SoftBank also holds a roughly 13% stake in OpenAI, backed by a commitment to invest about $40 billion in the firm. Additionally, it is a participant in the Stargate project, a $500 billion initiative to build U.S. data centers alongside OpenAI and Oracle.
Despite the ongoing AI boom, these portfolio companies face significant headwinds. OpenAI's market share in the AI industry has slipped below 50% for the first time, according to recent reports, as competitors like Google's Gemini and Anthropic's Claude gain ground. Chinese firms such as Moonshot and DeepSeek are also intensifying competition. Moonshot's Kimi K3 model has emerged as a leading alternative, raising concerns that customers may shift to lower-cost Chinese models over pricier American offerings. These dynamics have reportedly led OpenAI to consider postponing its anticipated initial public offering.
AI trade unwinding hits broader tech
The decline in SoftBank's stock is part of a broader rout in AI-related equities. Kioxia Holdings has dropped over 60% from its peak, while South Korean memory chip giants SK Hynix and Samsung are in deep correction territory. The Asia tech rout has accelerated as investors reassess the return on investment from massive AI capital expenditures. Upcoming earnings from Meta Platforms and Microsoft will provide further clues on spending trends. While continued investment could support suppliers, the market is increasingly focused on profitability rather than just spending levels.
Technical outlook points to further downside
The weekly chart shows SoftBank's stock has broken below the 50% Fibonacci Retracement level and the 50-week exponential moving average. The Relative Strength Index is trending lower, suggesting bearish momentum. The next key support lies at the 61.8% Fibonacci level of ¥4,165. A break below that could open the door to deeper losses as sentiment in the AI sector remains fragile.
Investors are also watching for any signs of stabilization in SoftBank's own fundamentals. The company's ability to navigate the shifting AI landscape and the performance of its portfolio companies will be critical in determining whether the stock can find a floor. For now, the path of least resistance appears lower, with the AI trade unwinding showing no signs of abating.
This article is for informational purposes only and does not constitute financial advice.
