SoftBank shares plunged over 8% Friday, extending a brutal week for the Japanese tech investor. The company faces roughly $53 billion in market cap losses if Friday's decline holds.
SoftBank had already dropped 10% Wednesday - its worst day since April - before gaining nearly 3% Thursday. Friday's slide erased that brief recovery.
The group holds a wide range of AI investments across infrastructure, semiconductors, and application companies. That concentrated exposure is now working against it.
"SoftBank Group's shares are falling as many bought it as the only listed proxy for OpenAI," said David Gibson, senior research analyst at MST Financial.
The pullback reflects growing caution around the AI sector. Gibson told CNBC there's a realization that many of OpenAI's partnerships are "still potential rather than confirmed, with funding prospects uncertain."
OpenAI CEO Sam Altman reportedly discussed potential federal loan guarantees with the US government to encourage chip factory construction. His CFO also suggested the firm hoped for federal help securing chip financing.
Those comments highlight uncertainty around OpenAI's funding situation - worrying for investors who bought SoftBank as an OpenAI proxy.
The selloff hit tech stocks across Asia. Semiconductor testing equipment maker Advantest dropped over 6%. Chipmaker Renesas Electronics fell nearly 4%. Tokyo Electron declined 1.46%.
TSMC, the world's largest chipmaker, fell 0.6%. Nvidia-supplier SK Hynix dropped over 1%. Samsung slipped 0.5%.
The Asian declines followed overnight losses in US AI stocks. Qualcomm fell almost 4% despite strong results after warning it could lose future Apple business. AMD slipped 7%. Palantir and Oracle dropped about 7% and 3% respectively. Nvidia and Meta also finished lower.
Excitement surrounding AI has raised worries about a tech bubble. Some experts argue AI company valuations resemble the late-1990s dot-com bubble, with stock prices rising well beyond realistic profit forecasts.
Laura Cooper, global investment strategist at Nuveen, offered a nuanced take: "Still, it's too soon to call a bubble. Today's AI capex is being funded largely by cash-rich firms with solid balance sheets, not cheap credit or speculation."
She warned the greater risk isn't a bubble bursting, but "valuation fatigue - investors tiring of paying ever-richer premiums for AI returns that don't materialize quickly enough."
SoftBank's $53 billion weekly loss shows how quickly sentiment can turn on AI investments. The company bet heavily on the sector and is now paying the price as investors reassess valuations.
The "OpenAI proxy" label Gibson mentioned captures both SoftBank's appeal and its problem. When OpenAI looks promising, SoftBank benefits. When uncertainty around OpenAI's partnerships and funding emerges, SoftBank gets hammered.
The selloff spreading globally across AI-related stocks suggests this isn't SoftBank-specific. Investors are pulling back from the entire sector after months of relentless gains. Advantest down 6%, AMD down 7%, Palantir down 7% - these are significant single-day moves for major companies.
Cooper's "valuation fatigue" concept is key. Investors aren't necessarily saying AI won't deliver. They're saying they're tired of paying sky-high prices today for returns that may not come for years.
That's different from a bubble bursting but potentially just as damaging for stock prices in the near term. If investors decide to wait for AI profits to materialize before paying premium valuations, stocks can fall significantly even without the underlying technology failing.
SoftBank's concentrated AI exposure makes it especially vulnerable to this dynamic. The company can't diversify away from AI concerns because AI is its core thesis. When the sector struggles, SoftBank amplifies those losses.
