SoftBank Group shares tumbled almost 11% in Tokyo on Friday as a deepening sell-off in artificial intelligence stocks pushed the cost of insuring the conglomerate’s debt to its highest level in four years. The slide made SoftBank one of the heaviest decliners on a day when Japan’s Nikkei share average fell around 6%, according to Reuters and Fox Business.
The Japanese investment group has become a bellwether for the AI investment cycle through its large stakes in chip designer Arm and ChatGPT developer OpenAI. Rising credit spreads signal growing investor concern over the debt SoftBank has taken on to fund those bets, just as confidence in the pace of AI infrastructure spending weakens.
The moves extended a global rout that began on Wall Street, where technology shares slumped on Thursday, and spread across Asia on Friday with steep losses in South Korea and Taiwan.
Key Takeaways
- SoftBank Group shares fell about 10.8% in Tokyo on Friday amid a broad AI-led market sell-off.
- The cost of protecting SoftBank’s debt against default rose to its highest level in four years.
- Japan’s Nikkei dropped about 6% and posted its worst week since 2020.
- SoftBank’s exposure to Arm and OpenAI has made it a closely watched gauge of AI investment sentiment.
Credit Markets Flash Warning Signs
SoftBank’s five-year credit default swaps, which investors use to hedge against a borrower failing to repay, widened to a four-year high on Friday, Reuters reported, citing Markit data. Bloomberg reported last month that the same measure had already reached its highest level since late 2022, as investors scrutinised AI-related funding needs and rising financing costs.
The group has invested $64.6 billion in OpenAI, according to Reuters and other reports, after completing the final phase of its latest funding commitment earlier this autumn. Part of that spending has been supported by additional borrowing, which has increased market sensitivity to any shift in sentiment towards AI valuations.
Investor focus on SoftBank’s balance sheet is not new. The group has spent years managing the swings of its Vision Fund portfolio, including a period when a rebound in technology holdings set the stage for a return to profit, illustrating how closely its results track the wider tech cycle.
Arm Weakness Adds Pressure
Pressure on SoftBank intensified after Arm, in which it holds a stake of about 90%, fell roughly 13% in US trading on Thursday following quarterly results that disappointed investors with their forward guidance, according to market reports and Investing.com.
Arm is SoftBank’s single most valuable listed asset, so moves in its share price feed directly into the group’s net asset value and the collateral supporting its borrowing. The chip designer has remained central to SoftBank’s strategy since its return to public markets amid strong demand for the listing.
SoftBank shares have now fallen by roughly half from their peak in June, according to Bloomberg and other reports, reversing a large part of the gains driven by enthusiasm over AI earlier in the year.
Asian Markets Join Global Rout
The Nikkei closed down about 6% at 57,434.77 on Friday, its biggest daily drop since April 2025, capping its worst week since March 2020, Reuters reported. South Korea’s Kospi fell more than 8% at one point, triggering a temporary trading halt, while chipmakers Samsung Electronics and SK Hynix posted steep losses, according to Fox Business.
The sell-off followed a slump on Wall Street, where the Nasdaq Composite fell about 5.5% on Thursday and Qualcomm dropped more than 9% after weak guidance. Investors have grown concerned that the Democratic Party’s sweeping gains in the US midterm elections could slow the build-out of data centres and other AI infrastructure, a theme that emerged as data centre stocks slid following the election results.
Maki Sawada, a strategist at Nomura Securities, said investors were likely to become more selective towards AI-related shares, assessing companies individually rather than buying the theme across the board, according to Reuters.
Outlook Hinges on AI Sentiment
Attention will now turn to SoftBank’s next quarterly results, where investors are expected to seek clarity on the group’s funding plans, loan-to-value position and the outlook for its OpenAI investment. Any sign of further asset sales or new borrowing is likely to be closely scrutinised by credit markets.
In the near term, SoftBank’s share price and credit spreads appear set to remain highly sensitive to swings in US technology stocks and to policy signals from Washington. A stabilisation in AI-linked shares would ease some pressure, but the episode highlights how leveraged exposure to a single investment theme can amplify volatility for one of the world’s most prominent business investors.
