SoftBank Stock Falls on Arm Downgrade and Skepticism Over AI Forecasts

SoftBank Group Corp. shares declined on Wednesday, pressured by a sharp overnight drop in its key portfolio company, Arm Holdings, following a stock downgrade and investor unease over CEO Masayoshi Son's recent, ambitious artificial intelligence forecasts.

Arm Downgrade Pressures Portfolio

The Japanese investment conglomerate's stock (TYO:9984) fell 3.2% to ¥6,367 in Tokyo trading. The drop followed a nearly 6% slide in the U.S.-listed shares of chip designer Arm Holdings on Tuesday, which is considered a crown jewel in SoftBank's portfolio.

The sell-off in Arm was triggered after HSBC downgraded the stock to "Hold" from "Buy." According to the bank, much of Arm's potential growth from the AI boom is already reflected in its price, which has surged over 140% in 2026. HSBC also cited that near-term upside is limited by production capacity constraints at major contract chipmaker TSMC, which could restrict shipments of Arm's AI server CPUs.

Investors Question Ambitious AI Vision

Sentiment was also impacted by investor skepticism following CEO Masayoshi Son's bold pronouncements at the Softbank World 2026 event on July 14. Son's remarks included:

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• A projection that global AI infrastructure would require $5 trillion in annual investment by 2040.
• A forecast that AI revenue would account for 20% of global GDP by the same year.
• A declaration that concerns about an AI bubble were "absurd."

According to Investing.com, the remarks appeared to trigger profit-taking, as investors noted a lack of clear methodology behind the figures and felt the vision did little to address the company’s more immediate monetization pressures.

OpenAI IPO Delay Remains a Headwind

An ongoing overhang for the company is the delayed initial public offering of OpenAI. SoftBank has a significant investment in the AI firm, expected to surpass $60 billion by the end of 2026, and markets had anticipated a near-term liquidity event from a public listing.

With the OpenAI IPO now widely expected to be pushed into 2027, the timeline for SoftBank to realize returns has been extended. This has raised questions among investors about the company's liquidity position and its ability to recycle capital into new ventures.