On January 28, 2025, the SoftBank logo will be displayed at directly managed stores in Tokyo.
Kazunari Kato | Reuters
SoftBank’s rise to become Japan’s most valuable company has put the conglomerate in the spotlight and raised questions about whether it is taking too much risk with its highly leveraged bets on artificial intelligence.
Shares in the Japanese technology investment giant, led by founder Masayoshi Son, have soared about 70% this year on investor enthusiasm for AI, driven by the soaring valuation of chip design company Arm Holdings and hopes that OpenAI could make a major initial public offering this year.
The rise helped SoftBank unseat Toyota in the market capitalization rankings earlier this week, cementing a dramatic turnaround for the company, which just a few years ago was plagued by losses related to its WeWork debacle. SoftBank’s cumulative investment losses in WeWork exceeded $14 billion.
Analysts interviewed by CNBC warned that the market’s renewed optimism about SoftBank also masks increased balance sheet risk.
“SoftBank is betting itself on a high-leverage bet on AI that comes with not only risk but also big upside,” said Gil Luria, head of technology research at Davidson Equity Capital Markets.
Softbank stock since the beginning of the year
The company participated in an OpenAI funding round last year at a reported valuation of $300 billion and has continued to deepen its involvement. In March, the company secured a $40 billion bridging loan to fund additional investments in OpenAI and general corporate purposes.
According to the securities report, SoftBank’s standalone interest-bearing debt was approximately 16.3 trillion yen (approximately $104 billion) at the end of 2025.
S&P Global estimated in March that OpenAI would account for about 30% of SoftBank’s investment portfolio, similar to Arm Holdings’ share, following the group’s additional $30 billion investment in the ChatGPT maker.
S&P Global Ratings revised SoftBank’s credit outlook to negative in March, saying the company’s asset liquidity, portfolio quality, and financial strength are “likely to deteriorate due to the additional large investment in OpenAI.”
For some investors, the concern isn’t just the amount of debt, but that SoftBank’s future is too dependent on one company.
If OpenAI does well, the leverage will be high. But if OpenAI and other investments underperform, that leverage could hurt SoftBank.
Jay Ritter
Warrington Business College
“SoftBank’s risk profile is large and getting bigger,” said Richard Windsor, founder of stock research firm Radio Free Mobile. “If Open AI fails to deliver, SoftBank could easily face a liquidity crunch.”
The growing reliance on OpenAI also raises questions about what will happen when enthusiasm for AI evaluation wanes.
“If OpenAI does not successfully IPO at or above its current valuation, it could put some pressure on SoftBank given the size of its exposure,” Luria said. After raising a record $122 billion funding round in March, OpenAI was valued at $852 billion.
Jay R. Ritter, professor emeritus at Warrington School of Business, said SoftBank’s leverage magnifies both the upside and downside of the trade. “SoftBank’s acquisition is also a leveraged bet on OpenAI,” he said. “If OpenAI performs well, the leverage is high. However, if OpenAI and other investments perform poorly, the leverage will hurt SoftBank.”
He also pointed to other weaknesses in SoftBank’s vast portfolio, including underperforming holdings such as Coupang and Didi, while noting that the company’s large losses from WeWork illustrate the dangers of concentrated bets.
SoftBank pumped billions of dollars into WeWork through its Vision Fund, making it once one of the world’s most highly valued startups, but the office-sharing startup’s reputation has collapsed amid concerns over its business model and corporate governance. The coronavirus pandemic has exacerbated financial difficulties.
The company, once valued at $47 billion, filed for bankruptcy protection in the United States in 2023, forcing SoftBank to absorb huge losses.
Some investors argue that the risks remain manageable. Comgest portfolio manager Richard Kaye said SoftBank’s assets remain sufficient to cover its debt obligations and the company’s loan-to-value ratio remains below 25%.
“SoftBank’s debt is sustainable because its loan-to-value ratio, which is the ratio of total borrowings to the value of immediately fungible equity, is below 25%,” Kay said, adding that lenders remain willing to extend financing against SoftBank’s equity holdings.
He said OpenAI’s disappointment does not create solvency issues. “OpenAI’s disappointment will manifest as a temporary price drop, but there is no need to cause a liquidity shortage as SoftBank owns enough shares to offset such losses.”
In a recent interview with CNBC, Son defended SoftBank’s aggressive AI efforts, calling the technology revolution “50 times bigger” than the dot-com boom and arguing that any upcoming correction in AI stocks will be a buying opportunity rather than a structural threat.
SoftBank did not immediately respond to CNBC’s request for comment.
