SoftBank’s market value has fallen 50% from its June peak, wiping out the gains that briefly made Masayoshi Son’s company Japan’s most valuable business. Shares dropped another 6.9% Thursday, leaving the technology investment group worth approximately $157 billion after investors began questioning whether its enormous artificial intelligence ambitions can withstand rising borrowing costs.
Four months ago, SoftBank had overtaken Toyota in market capitalization, a remarkable achievement for a company whose value increasingly depends on investments in businesses that have yet to establish the profitability investors expect. Now it is worth less than Hitachi and Recruit Holdings, and its shares have become the Nikkei’s worst performers this month.
The reversal is particularly uncomfortable for Son because the market is questioning the financial structure behind his strategy rather than simply the prospects for artificial intelligence. SoftBank has spent years assembling investments across chips, infrastructure, robotics and AI developers. The concern is whether the debt supporting those commitments is becoming more expensive faster than the underlying businesses can generate returns.
The clearest warning has come from the credit markets. The cost of insuring SoftBank’s debt against default climbed to its highest level in nearly four years this week, reflecting growing anxiety about the company’s borrowing obligations.
That deterioration matters because Son has made leverage an essential component of his investment strategy. SoftBank uses borrowed capital to acquire stakes in companies whose future valuations it expects to rise substantially. When those expectations are rewarded, leverage can magnify returns. When valuations decline or financing costs increase, the same structure can magnify the pressure on shareholders.
Kazuyuki Muramatsu, head of investment management at Nagomi Capital, identified SoftBank’s leveraged financial structure and rising borrowing costs as particular vulnerabilities. He warned that a broader deterioration in sentiment toward AI could reduce the valuations of SoftBank’s Vision Fund investments, potentially making subsequent financing more expensive.
That is the complication facing Son. A decline in the value of AI investments can weaken the financial position of the company holding them, while higher financing costs can make it more difficult to support those investments through the next stage of development.
SoftBank’s exposure to OpenAI illustrates the scale of the commitment. The company has invested approximately $65 billion in the AI developer, making it one of the largest financial backers of the business at the center of the industry’s expansion.
The investment has also become increasingly concentrated. SoftBank’s own financing documents anticipated a cumulative OpenAI investment of $64.6 billion and an ownership interest of approximately 13% following completion of its 2026 commitments. The company has effectively made OpenAI’s commercial success one of the defining variables in its own financial future.
Son has pursued that position with extraordinary conviction. In September, SoftBank raised $11.1 billion through what was described as the largest corporate high-yield bond offering on record, providing additional capital for its AI ambitions.
The financing demonstrated that investors were still willing to lend substantial sums to SoftBank. But it also increased the importance of the company’s future borrowing costs and the market value of the assets supporting its investment program.
Until recently, the extraordinary valuations attached to AI businesses helped justify that approach. Investors anticipated that demand for advanced models, computing infrastructure and related technologies would expand rapidly enough to reward companies willing to commit capital early.
That expectation has become more difficult to sustain without examining how the expansion is financed.
The immediate catalyst for the latest anxiety has been the deterioration in debt issued by CoreWeave, the American cloud infrastructure provider whose business depends on supplying computing capacity to AI developers. Its bonds have fallen to levels associated with financial distress, prompting investors to reconsider the risks across the industry’s heavily financed infrastructure providers.
CoreWeave’s difficulties do not establish that SoftBank faces the same financial circumstances. The businesses have different assets, obligations and sources of capital. But the selloff has exposed a common vulnerability: enormous demand for AI computing does not automatically guarantee that the companies financing its development will earn sufficient returns.
For SoftBank, that distinction is particularly consequential. The company isn’t merely financing one segment of the AI industry. Its investments extend across infrastructure, energy, semiconductors, robotics and the developers building the models themselves.
That breadth could eventually become an advantage if the technologies reinforce one another and produce substantial commercial earnings. It also creates multiple points at which rising capital costs or disappointing valuations can affect the group’s financial position.
Competition among AI developers adds another uncertainty. OpenAI faces increasingly capable Chinese rivals offering comparable performance at lower prices, potentially placing pressure on the economics that underpin its valuation.
SoftBank’s investment thesis depends not only on AI adoption continuing to grow, but also on its chosen companies capturing enough of the resulting economic value to justify their financing requirements.
That is a more demanding proposition than predicting that artificial intelligence will transform business and society.
The contrast with SoftBank’s position in June is striking. At its peak, investors appeared willing to reward Son for assembling one of the world’s most ambitious portfolios of AI investments. Four months later, the same portfolio is attracting scrutiny because of the capital required to support it.
The company’s market capitalization now stands near ¥24.7 trillion, approximately $157 billion. Its shares have lost more than 30% this month alone, erasing September’s gains as concerns about financing have spread through the technology sector.
Those declines don’t necessarily mean SoftBank’s underlying investments have lost half their economic value. A holding company’s share price reflects expectations about its assets, liabilities, future returns and the discount investors demand for the risks of owning them.
SoftBank itself has acknowledged that the complexity of its investment portfolio and its substantial holdings in private companies contribute to a gap between its estimated net asset value and its market capitalization. That gap can widen when investors become less confident about valuations or more concerned about borrowing costs.
Son has survived dramatic reversals before. SoftBank’s history includes enormous gains, severe losses and repeated commitments to technologies whose commercial potential was difficult to measure at the time of investment.
But the latest decline presents a challenge that optimism about AI alone cannot resolve. The company must demonstrate that its investments can generate enough value to justify both their acquisition costs and the increasingly expensive capital used to finance them.
That leaves Son confronting two separate markets. Equity investors are reassessing the value of his AI empire, while credit investors are demanding greater compensation for lending to it.
The distinction may prove more important than the 50% share-price decline itself. A stock can recover when enthusiasm returns. A financing strategy becomes harder to sustain when the cost of capital rises and the assets supporting it become less certain.
Masayoshi Son has spent years betting that artificial intelligence will create extraordinary wealth. SoftBank’s latest reversal suggests investors are no longer questioning only how much that future might be worth.
They’re asking how much it will cost to get there.