SoftBank shares fall more than 8% as pressure on AI-related stocks rises again

Japan’s share Softbank Group AI stocks resumed their decline on Friday following a broader selloff as investors once again became wary of the sector’s high valuations.

The group, which has a wide range of AI investments across infrastructure, semiconductor and application companies, saw its stock price drop more than 8%.

This comes after SoftBank rose nearly 3% in pre-market trading before plunging 10% on Wednesday, its worst day since April. About $53 billion in market capitalization has been wiped out this week, and if Friday’s losses hold, it would be the worst weekly loss since March 2020.

“SoftBank Group stock is down because a lot of people bought into it as the sole listed agent for OpenAI,” said David Gibson, senior research analyst at financial services firm MST Financial.

He told CNBC that the exit reflects growing wariness about the AI ​​sector and the recognition that many of OpenAI’s partnerships are still potential rather than firm, with funding prospects uncertain.

OpenAI CEO Sam Altman reportedly said the company has discussed the possibility of federal loan guarantees to facilitate the construction of a chip factory with the U.S. government. His comments came after OpenAI’s chief financial officer (CFO) suggested the company wanted federal support in securing chip funding.

SoftBank owns a controlling stake in Arm Holdings, a UK-based semiconductor design company whose chips power mobile and AI processors around the world. NASDAQ-listed Arm shares fell 1.21% overnight.

Separately, Bloomberg recently reported that the group was considering acquiring U.S. chipmaker Marvell Technology earlier this year, citing people familiar with the matter.

Other Japanese tech stocks also fell. Semiconductor testing equipment maker Advantest fell more than 6%, chipmaker Renesas Electronics fell nearly 4% and chip manufacturing equipment maker Tokyo Electron fell 1.46%.

Shares of TSMC, the world’s largest semiconductor maker, fell 0.6%.

Nvidia Supplier SK Hynix fell more than 1%, while fellow South Korean memory chip maker Samsung fell 0.5%.

The decline in Asian tech stocks also follows an overnight drop in U.S. AI companies.

Qualcomm fell about 4% despite strong quarterly results as it warned it could lose future Apple business. AMD, which performed well on Wednesday, fell 7%, while Palantir and Oracle fell about 7% and 3%, respectively. Nvidia and Metaplatform also fell.

The excitement around AI is raising concerns that the market is experiencing a technology bubble. Some experts argue that AI company valuations are starting to resemble the dot-com bubble of the late 1990s, with stock prices rising far beyond realistic profit expectations.

Laura Cooper, global investment strategist at Nuveen, said the economic impact of artificial intelligence is undeniable and a market rally is inevitable.

“Still, it’s too early to call it a bubble. Today’s AI capital spending is primarily funded by cash-rich companies with strong balance sheets, rather than cheap credit or speculation,” she said. “The bigger risk is not a bubble bursting, but valuation fatigue. Investors are tired of paying an increasingly high premium for AI returns that don’t materialize fast enough.”