SoftBank's AI Bet: High Stakes and Mounting Risks

SoftBank's ascent to becoming Japan's most valuable company has put the spotlight on the conglomerate, raising questions whether it is taking on too much risk through its highly leveraged bet on artificial intelligence.

Shares of the Japanese technology investment giant, led by founder Masayoshi Son, have surged about 70% this year on investor enthusiasm over AI, buoyed by the soaring valuation of chip designer Arm Holdings and expectations that OpenAI could see a blockbuster initial public offering this year.

The rally helped SoftBank dethrone Toyota in market capitalization rankings earlier this week, cementing a dramatic turnaround for a company that only a few years ago was reeling from losses tied to its failed WeWork bet. SoftBank's cumulative investment losses in WeWork exceeded $14 billion.

Analysts whom CNBC spoke to warned that the market's renewed optimism on SoftBank is also masking mounting balance-sheet risks.

"Softbank has made itself into a highly leveraged bet on AI which carries significant upside as well as risk," said Gil Luria, head of technology research at Davidson equity capital markets.

The company participated in OpenAI's funding round last year at a reported $300 billion valuation and has continued to deepen its involvement. It secured a $40 billion bridge loan in March to help fund additional investments in OpenAI and for general corporate purposes.

As of the end of 2025, SoftBank had about 16.3 trillion yen (about $104 billion) in stand-alone interest-bearing debt, according to its financial statement.

S&P Global in March estimated that OpenAI would account for roughly 30% of SoftBank's investment portfolio, on par with Arm Holdings, 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 and quality of its portfolio, as well as its financial capacity are "likely to deteriorate because of its additional huge investment in OpenAI."

For some investors, the concern is not simply the amount of debt, but the overreliance of SoftBank's future on one company.

If OpenAI does well, leverage is great. But if OpenAI and other investments do poorly, the leverage will hurt Softbank.

Jay Ritter

Warrington College of Business

"The risk profile of Softbank is large and getting larger. If OpenAI fails to deliver there could easily be a liquidity crunch at SoftBank," said Richard Windsor, founder of equity research firm Radio Free Mobile.

The growing dependence on OpenAI has also raised questions over what happens if enthusiasm surrounding AI valuations cools.

"If OpenAI does not successfully IPO at the current valuation or better, that could create some pressure on Softbank given the size of the exposure," Luria said. OpenAI's was valued at $852 billion following a record $122 billion funding round in March.

Jay R. Ritter, emeritus professor at the Warrington College of Business, said SoftBank's leverage amplifies both the upside and downside of the trade. "Buying Softbank is partly a leveraged bet on OpenAI," he said. "If OpenAI does well, leverage is great. But if OpenAI and other investments do poorly, the leverage will hurt Softbank."

He also pointed to other weak spots in SoftBank's sprawling portfolio, including underperforming holdings such as Coupang and Didi, while noting that the company's heavy losses from WeWork illustrated the dangers of concentrated bets.

SoftBank through its Vision Fund poured billions into WeWork, once among the world's most highly valued startups, but the office-sharing startup's valuation collapsed amid concerns over its business model and corporate governance. The Covid pandemic worsened its financial troubles.

The company, once valued at $47 billion, filed for bankruptcy protection in the U.S. in 2023, forcing SoftBank to absorb massive losses.

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Some investors argue the risks remain manageable. Richard Kaye, portfolio manager at Comgest, said SoftBank's assets still comfortably cover its debt obligations and that the company's loan-to-value ratio remains below 25%.

"Softbank's debt is sustainable because its loan to value ratio, its total borrowings vs. its immediately fungible equity value, is below 25%," Kaye said, adding that lenders remain willing to extend financing against SoftBank's equity holdings.

He said an OpenAI disappointment would not create a solvency issue. "An OpenAI disappointment would show as a one-off markdown, but need not create a liquidity crunch since Softbank holds enough equity to offset such losses."

Son, in a recent interview with CNBC, defended SoftBank's aggressive push into AI, calling the technology revolution "50x bigger" than the dot-com boom and arguing that any future correction in AI-related stocks would represent a buying opportunity rather than a structural threat.

SoftBank did not immediately respond to CNBC's request for comment.