What moved the market
SoftBank's shares have rebounded after sliding from a June peak and are up around 52% this year. After four straight down months, September finally delivered a positive close, with a 24% gain over the four weeks, as excitement about OpenAI's new GPT-6 Astra and its bid to raise $30 billion at a $1.4 trillion valuation refocused investors on Masayoshi Son's $65 billion pledge to the ChatGPT maker.
Funding the vision is getting pricier. Last month, SoftBank tapped the market for $11.1 billion, marking the biggest corporate high-yield bond offering ever recorded. Strong demand allowed some price tightening, yet on the whole its financing expenses remained mostly above prior levels.
Credit default swaps climbed to their highest since 2023, reflecting persistent questions about AI safety, rising costs and intensifying competition. That split contrasts with a selloff in Oracle shares after the company invoked force majeure as protection from soaring data center costs.
Why investors are split
Some equity holders are letting the AI story lead and putting financing mechanics in the back seat.
Arm's slump from its June high has eased, with shares rising around 20% last month. That matters for SoftBank, which holds almost 90% of the chip designer and counts it as a major chunk of asset value. Dai estimates demand for central processing units could reach into the hundreds of billions of dollars by 2030, potentially as much as $330 billion, as AI agents increasingly execute code and use web browsers. He also said Arm's order outlook is positive.
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Others focus on the financing overhang. Han Jiho at Sparx Asset Management said the stock's ongoing discount to net asset value implies equity investors are factoring in credit risk. "If CDS spreads continue to widen, further gains in NAV may have a more limited impact on the share price," he said. S3 Partners reports that, this week, short interest as a share of the float rose to 2.36% of the tradable stock, the highest level of the year.
Balance of assets, valuation and risks
SoftBank's exposure stretches across the AI stack, from robotics and data centers to energy. While the growing OpenAI wager is a swing factor, investors also point to plans to expand in other AI arenas - including data centers and an initiative to acquire ABB Ltd.'s robotics unit - as avenues to benefit no matter which platforms end up leading. The portfolio also includes wireless operator SoftBank Corp., which serves millions of subscribers and is building data centers alongside a stack of enterprise services.
From a valuation standpoint, as of Sept. 29 the shares traded 24% below net asset value, a gap wider than the 20% average discount year to date, according to Bloomberg Intelligence. A separate view of the June quarter showed Arm representing roughly half of NAV, with OpenAI marked to a $730 billion benchmark as of Feb. 26.
Expectations among analysts are mostly constructive: there are 17 buys, six holds and one sell, with an average 12 month target of ¥9061 ($57.21) versus Thursday's ¥6701 Tokyo close. In the June quarter, SoftBank posted a net profit largely tied to its Intel stake, providing some runway while it pursues OpenAI and other multibillion dollar AI projects. Still, competition among AI developers and heavier debt loads remain pressure points.
As Bloomberg Intelligence's Kirk Boodry put it, "If OpenAI doesn't do well, sentiment is going to be a lot worse, but they still do own assets in other areas," adding that such broad AI exposure is unusual in Japan. Resona Holdings strategist Hiroki Takei cautioned, "If the AI boom ultimately turns out to be a bubble and bursts, the damage could be severe given their leveraged investment," but said recent earnings frame higher borrowing costs more as tail risks and bond issuance as financing for growth.
What this could mean for your portfolio
The setup is a classic split screen: on one side, GPT-6 Astra, a planned $30 billion OpenAI raise and a recovering Arm; on the other, pricier credit, wider CDS and a record junk bond print. The stock's discount to NAV may look tempting if you think the AI buildout has a long runway, but the market is clearly watching how SoftBank manages higher funding costs and whether its AI bets deliver at scale.
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