SoftBank Group Corp.'s shares plummeted by more than 13% in early Monday trading in Tokyo, marking their steepest decline since late June. This drop was primarily triggered by calls from the heads of Anthropic PBC and OpenAI for a halt in advanced artificial intelligence development due to safety concerns. This heightened market anxiety surrounding SoftBank, a major Japanese tech investor heavily vested in AI.
SoftBank is a significant backer of OpenAI, with plans to increase its cumulative investment in the ChatGPT developer to nearly $6.5 billion by October. The company, led by founder Masayoshi Son, is pursuing several multi-billion dollar AI projects despite uncertainties about their revenue generation and return on investment. Son has previously dismissed concerns about an AI bubble, leading to high volatility in SoftBank's stock.
Adding to SoftBank's pressures is its increasing debt burden. The company plans to issue 1 trillion yen (approximately $6.5 billion) in bonds to retail investors and intends to borrow another $1 billion linked to OpenAI shares to fund acquisitions and data center constructions. The market is also concerned that OpenAI's valuation may not be as high as previously anticipated, especially after OpenAI co-founder Sam Altman confirmed the company would not go public until 2569, further dampening investor sentiment.
Market analysts like Yugo Tsuboi, Chief Strategy Officer of Daiwa Securities, noted that investors are cautiously monitoring the situation, as the extent of a potential slowdown in AI development remains unclear. While Dario Amodei, CEO of Anthropic, stated that a slowdown in cutting-edge AI capabilities doesn't necessarily mean reduced industry spending or growth, overall concerns about AI investment outlook persist. SoftBank's stock has fallen approximately 30% from its June peak following reports of OpenAI's IPO postponement, intensified competition in the AI industry, and several security breaches.
