“Many investors bought SoftBank as the only listed proxy for OpenAI,” David Gibson, senior research analyst at MST Financial, noted. He added that questions about the durability of OpenAI’s partner pipeline and financing outlook have prompted a reassessment of near-term growth prospects.
OpenAI Chief Executive Sam Altman recently indicated the firm had discussed potential federal loan guarantees with U.S. officials to support construction of advanced chip fabrication plants. Earlier, OpenAI’s chief financial officer told industry participants the company hoped for government help in securing semiconductor funding. The remarks underscored how capital-intensive AI hardware remains and how dependent emerging projects are on external financing.
Arm shares under pressure; Marvell interest reported
SoftBank’s largest publicly listed asset, Cambridge-based chip designer Arm Holdings Plc, also eased. The Nasdaq-traded company’s stock slipped 1.21% overnight, trimming a rally that had previously lifted its valuation after its September 2023 initial public offering.
Separately, people familiar with the matter told Bloomberg that SoftBank explored a possible takeover of U.S. chipmaker Marvell Technology Inc. earlier this year, though discussions did not advance. Neither firm has commented publicly on the report.
Regional technology names retreat in sympathy
The sell-off in Tokyo rippled across Asia’s semiconductor and equipment sector. Testing equipment maker Advantest Corp. slid more than 6%, Renesas Electronics Corp. fell nearly 4%, and chip production gear supplier Tokyo Electron Ltd. lost 1.46%. Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, declined 0.6% in Taipei, while South Korean memory vendors SK Hynix Inc. and Samsung Electronics Co. slipped more than 1% and 0.5%, respectively.
U.S. technology shares tied to artificial intelligence were also weaker in Thursday’s New York session. Qualcomm Inc. dropped almost 4% despite issuing stronger-than-expected quarterly earnings, citing concerns it could lose future iPhone modem business. Advanced Micro Devices Inc. gave back 7% following gains the previous day, while Palantir Technologies Inc. and Oracle Corp. fell about 7% and 3%. Nvidia Corp. and Meta Platforms Inc. ended lower as well.
Debate over valuations intensifies
The swift appreciation of AI-focused companies during the past year has revived comparisons with the late-1990s dot-com bubble. Some strategists warn that share prices have outpaced realistic profit projections, leaving little room for disappointment if revenue growth slows. However, others argue that the current cycle differs because large technology groups possess substantial cash reserves to fund capital expenditures without relying heavily on leverage.
“The economic impact of artificial intelligence is undeniable and market bumps are inevitable,” Laura Cooper, global investment strategist at Nuveen, said in a client note. She cautioned that while talk of a bubble may be premature, investors could grow weary of paying higher premiums if anticipated earnings fail to materialize quickly.
Data compiled by Reuters show that aggregate price-to-sales multiples for leading AI-linked firms have expanded significantly since early 2023, reflecting lofty growth expectations.
SoftBank’s focus after Vision Fund losses
Chief Executive Masayoshi Son has positioned SoftBank as a long-term beneficiary of artificial intelligence after the group’s Vision Fund portfolios suffered heavy markdowns in recent years. The company shifted emphasis from consumer-facing start-ups toward core technologies such as semiconductors, with Arm regarded as central to that strategy.
Despite substantial unrealized gains from Arm’s listing, investors continue to scrutinize SoftBank’s indebted balance sheet, buyback capacity and the timing of any further asset monetization. The latest stock setback leaves SoftBank trading well below its year-to-date highs reached in February.
SoftBank is scheduled to announce quarterly earnings on May 15, when analysts expect management to provide updates on portfolio valuations, capital allocation and progress toward artificial-intelligence initiatives.
Crédito da imagem: Issei Kato / Reuters
