SoftBank's stock price has nearly halved from its June high, and the money-burning model of AI investment is being questioned by the market
According to Bloomberg, SoftBank's stock price fell as much as 6.7% during intraday trading, bringing its cumulative decline from its all-time high on June 2 to 50%, and it has fallen more than 30% this month. Market concerns have intensified because CoreWeave's bond prices have fallen to distressed-debt levels, and the quote for SoftBank's credit default swaps, used to hedge against the risk of debt default, has risen to a nearly four-year high. SoftBank has invested nearly $65 billion in OpenAI and in September issued $11.1 billion in junk bonds to support Masayoshi Son's AI investment plan.
Why read this
AI score 63
The original article links SoftBank's stock price pullback with CoreWeave's debt troubles and credit default swap quotes, presenting the market's concerns about borrowing heavily to invest in AI.
Topics
Body · AI translation
SoftBank shares nearly halve from June peak as AI investment spending spree draws market skepticism
English text is being prepared.
English text is being prepared.
On the 22nd local time, SoftBank shares fell as much as 6.7% intraday, bringing the cumulative decline from the all-time high set on June 2 to 50%. Earnings results from US mega-cap companies also failed to dispel market doubts.
Market concerns about AI investment had previously been intensified by the debt troubles of US cloud service provider CoreWeave. CoreWeave's bond prices fell to distressed-debt levels, exposing the financing risks facing the entire industry.
Kazuyuki Muramatsu, head of investment management at Nagomi Capital, noted that investors are paying increasing attention to the financial health of AI companies. SoftBank relies heavily on debt financing, and coupled with rising financing costs, its financial risk appears particularly prominent. If global markets turn pessimistic about AI growth prospects, the value of SoftBank Vision Fund's investment assets could decline, further pushing up the group's future financing risk premium.
SoftBank's credit risk is also rising. On the 20th local time, quotes for credit default swaps used to hedge against the risk of default on SoftBank's debt rose to a nearly four-year high.
SoftBank's investments in AI span infrastructure, energy, robotics and other industries, most of which are funded through borrowing. CoreWeave's debt problems have not only raised concerns among bond investors but also shaken the confidence of stock investors who had previously valued SoftBank's AI investment returns. SoftBank shares have fallen more than 30% this month, erasing all of September's gains.
English text is being prepared.
In September this year, SoftBank issued $11.1 billion (currently about RMB 74.252 billion) in junk bonds, setting a record for the largest corporate junk bond issuance, to support founder Masayoshi Son's ambitious AI investment plan.