SoftBank market value halves from peak on AI fears

SoftBank's slide comes after a rapid ascent: the stock hit an all-time high on June 2 and the company briefly overtook Toyota as Japan's largest company four months ago. Since then, the combination of higher borrowing costs and stress in AI-related credit markets has reversed that gain. CoreWeave's bonds falling to levels associated with distress appears to have been a catalyst, denting confidence even among equity investors who had focused on returns from SoftBank's AI bets.

The company's reliance on debt to fund investments across the AI ecosystem, from infrastructure and energy to robotics, leaves it exposed to shifts in credit markets. Kazuyuki Muramatsu of Nagomi Capital noted that if global sentiment toward AI growth turns sour, SoftBank's Vision Fund could face valuation losses, which would in turn raise the premium for future funding. The cost of insuring SoftBank's debt against default has already climbed, with credit-default swaps reaching the highest level in nearly four years on Tuesday.

Competitive pressure adds another layer. OpenAI, in which SoftBank has invested almost $65 billion, now faces more affordable Chinese rivals offering comparable performance. Meanwhile, SoftBank raised $11.1 billion in September through the largest corporate junk bond sale on record to finance founder Masayoshi Son's AI ambitions, a move that now looks more costly against the backdrop of rising borrowing costs.