Key Insights
- SoftBank stock fell 10.83% to ¥3,549 on Nov. 6.
- Five-year debt insurance spreads hit 466 basis points, highest since 2022.
- SB Energy reported $439 billion in backlog, not recognized revenue.
SoftBank stock plunged 10.83% in Tokyo on Nov. 6, closing at ¥3,549 as worries about artificial intelligence financing deepened. The Japanese investment group’s five-year credit default swap spread reached 466 basis points, its highest since October 2022. Investors weighed rising borrowing costs against its $64.6 billion investment in OpenAI and exposure to chip designer Arm.
The latest decline extended a selloff across artificial intelligence equities after the U.S. midterm elections. However, the election results alone did not establish what triggered SoftBank’s drop.
SoftBank Stock Plunges as Credit Insurance Costs Climb
Credit-market pressure has also kept SoftBank stock and its finances under investor scrutiny. The company has taken on more debt at record yields to finance its OpenAI investment. OpenAI’s delayed public offering has pushed the expected return timeline to 2027.
SoftBank issued $11.1 billion in bonds in September as it expanded funding for the stake, Reuters reported.
Meanwhile, SoftBank stock has fallen almost half since the start of September. Friday’s opening price matched the bottom of its reported 52-week range. The stock’s reported 52-week high was ¥9,074.
AI Selloff Puts SoftBank’s Investment Commitments in Focus
SoftBank stock has become a market bellwether for AI investment prospects, reflecting the group’s OpenAI, Arm, and SB Energy exposure. The group has committed $64.6 billion to OpenAI and owns a 90% stake in chip designer Arm.
It also finances data center development through SB Energy, linking its exposure to AI models and infrastructure.
That exposure has drawn closer scrutiny as markets reassess returns from AI infrastructure. The US midterm results added concerns that data center expansion could slow. SoftBank’s financing needs and OpenAI’s delayed listing have also kept attention on when its investments may produce returns.
Separately, SB Energy filed for a public listing in September at a potential $50 billion valuation. Media reports say the listing has been delayed until December or later.
Its filing projected about $439 billion in revenue from customer contracts, despite having no operational data centers. The filing also showed substantial dependence on OpenAI.
AI Stocks Face Election and Infrastructure Questions
Those concerns and AI stock decline broadened after Democratic candidates won sweeping victories in this week’s US midterm elections. Reuters reported the results raised fears of slower AI infrastructure development.
They also added to credit spreads for companies financing the buildout. Rolf Bulk heads semiconductors and infrastructure at Futurum Group. He said one-third of US data center capacity planned for 2027 and 2028 could face risk. Those projects are located in states where governors may slow development.
However, Bulk said the results would not affect near-term demand. Most data centers due in 2027 have already cleared regulatory hurdles and secured power, chips, and other components. He said the longer-term outlook for developers and funders was less certain. Political opposition is growing, while investors increasingly focus on returns.
Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors in Singapore, said AI infrastructure firms’ credit standing had declined steadily. He said equity markets were pricing in slower data center development and expected a near-term bottom.
Anvarzadeh also said shares could retest recent lows after a rebound, as evidence of a slowdown emerges next year.
Elsewhere, the stock price of SpaceX fell more than 6% despite Morgan Stanley’s AI upside target. Analyst Adam Jonas updated the company’s financial projections and maintained an Overweight rating.
Morgan Stanley set a $300 target against a $140 reference price. Its analysis described SpaceX’s AI and space infrastructure operations as undervalued.
This article provides market information, not investment advice. Equities and credit instruments carry financial risks, and market pricing does not guarantee future outcomes.
