After losing 40% of its market value, SoftBank urgently needs to prove to the world with its financial report that the AI gamble extends beyond OpenAI.

As SoftBank Group is set to announce its first fiscal quarter (April to June) results for the 2027 fiscal year on Thursday, a comprehensive examination of its bets on AI, debt leverage, and the value of new businesses is drawing this Japanese tech investment giant into the spotlight. Investors are not only keenly interested in whether it can continue to provide the ammunition needed for its commitments of up to tens of billions of dollars to OpenAI, but they are also urgently seeking to uncover the true value coordinates of SoftBank beyond ChatGPT, particularly in the areas of Siasun Robot&Automation, energy, and chips. As a barometer for AI investment sentiment in Japan, SoftBank's stock price has been declining since it hit a historical high on June 2. By the close on Tuesday, it had retraced about 40%, though it still maintains an approximate 19% increase year-to-date. However, its market capitalization ranking in Japan has slipped from a brief moment at the top to third place. On Tuesday, SoftBanks stock closed at 5,228 yen in Tokyo, nearly 40% below the average 12-month target price of 8,603 yen set by analysts, highlighting a significant discount that reflects the market's concern over uncertainty. At the same time, SoftBank's five-year credit default swaps have widened sharply by about 70 basis points since early 2026, reaching around 350 basis points, marking the widest level among Japanese firms and indicating that debt market investors' anxieties are intensifying. The current market environment will respond harshly to any signs of growth slowing, but if the financial report demonstrates substantial resilience, it can quickly soothe the market, proving that its aggressive transition toward AI is still well-considered, remarked Nikos Tzabouras, a senior financial strategist at trading platform Tradu, regarding the weight of this financial report. Beyond OpenAI, the re-evaluation of values concerning Siasun Robot&Automation, energy, and Arm The market generally believes that revitalizing confidence hinges on whether SoftBank can provide a clearer roadmap for its operations beyond its core AI assets, particularly regarding its renewable energy company SB Energy and the specific progress of the new entity Roze, which is planned to be listed in the U.S. These two platforms are critical for power supply in the context of the explosion of AI infrastructure and the Siasun Robot&Automation dimension. If they can successfully go public, they will offer publicly traded pricing anchors for SoftBanks investment portfolio. David Dai, managing director of Sanford C Bernstein in Hong Kong, noted that investors are scrutinizing SoftBank's underlying asset values in the energy sector and Siasun Robot&Automation with unprecedented detail. Putting price tags on these assets would be a very positive signal, he added, stating that any news regarding these two businesses would be beneficial. Similarly, SoftBanks acquisition progress of Siasun Robot&Automation from Swiss group ABB is also a market focus. This deal was announced last October and is expected to close in mid to late 2026. BTIG analyst Jesse Sobelson believes this move will provide SoftBank with a platform that possesses scaled revenues, clear customer bases, and the ability to integrate AI more smoothly into industrial automation of Siasun Robot&Automation. Additionally, SoftBank's nearly 90% stake in chip design company Arm (ARM.US) has seen its stock price retreat approximately 33% from previous highs, though it has still realized an incredible increase of over 200% in the past six months. The revenue expectations from self-developed CPUs expected around 2029 are likely to provide long-term support for SoftBank's valuation. David Dai emphasized, The issues related to OpenAI ultimately have a limited impact on SoftBank because Arm's share in its valuation is far larger. The mountain of debt: $40 billion bridge loan and the leverage debate Corresponding to these potential growth points is the massive debt structure SoftBank has set up to fulfill its AI commitments, which is also the core issue facing scrutiny in this financial report. To support its more than $60 billion commitment to OpenAI and its related infrastructure, SoftBank secured a $40 billion bridge loan in March this year, due in March 2027. Additionally, the company arranged a $20 billion margin loan secured by its Arm shares. However, according to media reports, SoftBanks attempts to further secure new loans against its holdings in OpenAI have faced obstacles, as lenders are becoming increasingly cautious about using equity in unlisted companies as collateral. Makiko Yoshimura, a rating analyst at S&P Global, stated, We believe Arm has robust credit conditions, but OpenAI is very fragile. It is a startup facing significant AI innovation risks and extraordinarily intense competition. The rise in Arm's share price led S&P to upgrade SoftBanks credit outlook from negative to stable in July. However, this does not mask the substantial discrepancies between both parties in calculating leverage ratios. Internally, SoftBank insists that its loan-to-value ratio (LTV) improved to 17% by the end of March, below the self-imposed red line of 25%; meanwhile, after factoring in margin loans, S&P estimates the LTV at that time could reach as high as 33%, predicting that the ratio would fall between 20% to 25% by June. Amir Anvarzadeh, a strategist at Asymmetric Advisors, warned, If Arms valuation declines, the amount of loans secured against it will not decrease proportionately. A substantial drop in asset prices could trigger liquidity tightening. Fitch Ratings has regarded the downturn in the AI market as a significant credit risk, citing persistent high valuations, enormous capital expenditure scales, and the extreme uncertainty of returns for AI companies. MST Financial analyst David Gibson noted in a report that unless end users and businesses can concretely demonstrate that this is the beginning of a productivity revolution, stocks related to SoftBank and Arm may continue to face pressure. A significant variable in the debt risk also lies within OpenAI itself. Its IPO timing and valuation are now facing headwinds from capital markets and substantial challenges from competitors. On one hand, reports suggest that OpenAI is seeking an IPO valuation of up to $1 trillion, a leap from the previous valuation of $852 billion, but the New York Times Company Class A disclosed that its listing plans may have been postponed until next year. On the other hand, competitors from China are providing similar AI models at much lower costs, which could ignite a price war, compressing profit margins for leading developers like OpenAI and impacting the demand for the chips that power them. Anvarzadeh stated, Considering the more conservative IPO valuation plans of Chinese AI companies, OpenAIs true value may be no more than $300 billion. The current skepticism surrounding financing capabilities seems to David Dai more like a mid-term hurdle rather than a fundamental long-term issue. No one can truly provide evidence that AI has not delivered on its promises, he stated. If SoftBanks management can successfully guide investors to look beyond the headline risks of OpenAI in their communications around the financial report and help the outside world see the deep value of its full-stack AI infrastructure layout, a return to the top of Japan's corporate market capitalization rankings for SoftBank may only be a matter of time. According to the latest average forecast from four analysts compiled by LSEG, SoftBank is expected to achieve a net profit of 148.4 billion yen (approximately $9.4 billion) in the April to June quarter. Currently, analysts remain generally optimistic about SoftBanks stock, with data showing it holds 16 buy, 6 hold, and only 1 sell rating.