SoftBank’s stock price has crashed by 50% from its all-time high as concerns about the AI industry persist. The stock ended the week at ¥4,481, down 50% from its year-to-date high of ¥9,048. The sell-off may continue on Monday, as OpenAI’s recent fundraising flopped and Arm Holdings’ earnings loom.
One major risk that SoftBank faces is that its OpenAI investment is at risk. Media reports suggest that the company raised $11 billion in its latest fundraising round.
While this is a lot of money, it was much lower than its target of raising $30 billion. Worse, the company is raising these funds at a $1.25 trillion valuation, lower than the $1.4 trillion it was targeting.
The fundraising flop is a sign that investors are fighting back against these AI companies as competition rises. In OpenAI’s case, competition is coming from American companies like Anthropic and Grok. It is also competing with other Chinese companies like Z.ai, MiniMax, DeepSeek, and Huawei.
There is also a risk that the AI bubble is bursting. Indeed, AI stocks like Z.ai and MiniMax have all plunged by over 80% from their highest levels this year. Similarly, top companies like Micron, Kioxia, Lenovo Group, and SanDisk have all plunged in the past few months. These trends suggest that SoftBank’s AI bets may be flopping.
At the same time, SoftBank is a major investor in the Stargate project in the United States. This investment is a partnership with Oracle and OpenAI. One of the main challenges is Project Jupiter, which has faced some major challenges.
It is also an investor in Perplexity AI, a company that has lost momentum. SimilarWeb data shows that its website traffic dropped by 3.7% in September to 97 million.
SoftBank stock has also plunged because of the ongoing Arm Holdings and Intel stock retreat. Intel stock has dropped in the last five consecutive weeks, reaching its lowest level since April this year and 54% from its highest point this year. Its sell-off gained steam after the company published its earnings report. SoftBank is a big investor in Intel with over 86.9 million shares.
Similarly, Arm Holdings stock has dropped by 54% from the year-to-date high, its lowest level since May this year. This crash is particularly painful for SoftBank since it is its biggest shareholder with a 86.4% stake.
Arm stock will be in the spotlight as it publishes its financial results. Analysts expect that its revenue will come in at $1.38 billion, up by 21.4% from a year earlier.
SoftBank stock chart | Source: TradingView
The daily chart shows that the SoftBank share price has slumped in the past few months. It has dropped to ¥4,481, down sharply from a high of ¥9,077.
A closer look shows that the stock is about to form a death cross pattern as the spread of the 50-day and 200-day moving averages narrows. If this pattern forms, it may lead to more downside over time.
On the positive side, the stock has landed at the 61.8% Fibonacci Retracement level at ¥4,334. Therefore, there is a likelihood that the stock will rebound if bulls hold this level. On the other hand, losing this support suggests that the stock may drop to the 78.2% retracement level of ¥3,000.
