SoftBank’s AI Investment Strategy Faces Big Rewards—and Bigger Risks Amid Soaring Valuations

SoftBank Group’s upcoming second-quarter earnings report arrives as the company rides a wave of artificial intelligence (AI) investment that has driven its share price to record highs. However, analysts warn that the tech giant’s aggressive AI push could expose it to the growing risk of an “AI bubble,” reminiscent of previous debt-fueled missteps.

Fueled by optimism surrounding AI infrastructure and innovation, analysts have raised SoftBank’s share price targets. The company’s ties to AI frontrunner OpenAI—developer of ChatGPT—have become a key valuation driver. In April, SoftBank announced plans to lead a funding round of up to $40 billion for OpenAI at a $300 billion valuation. By October, the Japanese conglomerate reportedly joined investors buying $6.6 billion in OpenAI employee shares at a staggering $500 billion valuation.

SoftBank’s stock price has reflected this enthusiasm, soaring to a record 27,315 yen in late October—quadruple its early April level—before settling at 22,255 yen on Monday. Jefferies analyst Atul Goyal noted that the company’s stock now mirrors its exposure to OpenAI, marking a shift from years of tracking Alibaba shares, from which SoftBank has since divested.

While retail investors view SoftBank as a high-risk AI play, institutional investors remain cautious about overestimating OpenAI’s profitability. Founder and CEO Masayoshi Son has declared he is “all in” on AI, aiming to make SoftBank a leading platform for “artificial super intelligence” within a decade. Yet, with mounting losses at OpenAI and delays in SoftBank’s planned AI venture in Japan, profitability remains uncertain.

Despite past volatility from ventures like the Vision Fund, analysts expect SoftBank to post a net profit of around 207 billion yen ($1.37 billion) for the July–September quarter. Still, the company’s bold AI ambitions may test its ability to balance innovation with financial discipline.