SoftBank Shares Slip 40% as AI Bubble Fears Worsen 

In the first three quarters of 2025, the global tech companies braced for US President Donald Trump’s trade tariff storm. Since October, however, the overriding concern has been the threat of an artificial intelligence (AI) bubble. Investors are turning increasingly cautious about the AI companies and their unsustainable valuations.

Japanese technology conglomerate SoftBank Group, with deep exposure to AI companies, saw a sharp market correction ever since. Between October 31 and November 26, the company’s shares dropped by 40%, resulting in a loss of nearly $50 billion in market capitalisation.

The financial turmoil was not caused by a single event but resulted from a confluence of factors. The increasing scepticism was raised by Palantir Technologies, the AI software company, whose shares fell despite promising Q3 results, suggesting concerns over its valuation. 

The market reaction signalled a fundamental shift in investor behaviour. Strong performance was no longer enough to sustain the meteoric valuation based on the future AI potential. A Yahoo Finance report noted that Palantir traded at revenue multiples that exceed those of many established AI and cloud leaders and questioned whether current prices reflect long-term fundamentals or short-term enthusiasm.

Besides, Bank of America’s Global Fund Manager Survey in October revealed that 54% of respondents believed AI-related assets were in a bubble territory, and 60% said global equities were overvalued, Bloomberg cited.  

“Among other signs of rampant speculation, frantic venture capitalists are throwing money at AI startups at multi-billion-dollar valuations without even being told their plans,” Ben Inker, partner at GMO, the Boston-based investment management firm, wrote in their monthly newsletter. 

He further noted that equity investors are increasing the valuation of large corporations by hundreds of billions of dollars through investment deals with OpenAI, a company whose revenues would have to rise a hundredfold to fulfil its commitment. 

What Happened to SoftBank?

For SoftBank, its investments in AI companies, such as Arm, OpenAI, Perplexity, Databricks, and ByteDance, among others, make it more vulnerable to AI-related fears.  

Following the Palantir trigger on November 4, its quarterly results on November 5, and the subsequent announcement on November 11 to offload its entire stake in NVIDIA (32.1 million shares) for $5.8 billion and deepen its investment in OpenAI, market fears were amplified. A segment of investors, however, sought evidence of long-term conviction in the chip sector. 

“SoftBank’s softness has occurred as the market questions whether it sold a golden lottery ticket to buy a whole new stack of scratch-offs,” Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, told AIM in an email interaction.

Schulman added that this move “turns a category leader into a messy, high beta roulette wheel”, which led some investors to mark the shares down due to timing risk.

While major AI players continue to report strong demand, the rapid rise in valuations for companies like OpenAI has heightened concerns about timing risk and long-term sustainability, especially as markets reassess the gap between AI hype and financial results. Around this time last year, the AI giant was valued at $150 billion. Currently, its valuation is 5x at $750 billion. 

SoftBank’s decline had repercussions across global semiconductor markets as well, sparking widespread industry debate. The fall occurred at a delicate moment for investors monitoring Q4 earnings signals, movements in global tech stocks and turbulence within the semiconductor sector. 

NVIDIA’s stock price fell by about 3%, while other major tech firms experienced similar declines. Taiwan’s TSMC and China’s Alibaba also faced declines. 

SoftBank x OpenAI x Google

Adding to semiconductor share fluctuations, developments by major AI companies competing with OpenAI also played a role. 

Google’s release of Gemini 3 earlier this month, which delivered standout results across coding, reasoning, multimodal tasks and more, generated intense excitement, with many calling it a leap ahead in the AI race. 

That buzz flagging Gemini 3 as a formidable rival prompted some investors to question whether OpenAI could maintain its dominance. 

“The stocks are hit by concerns that the competition environment of OpenAI will become tougher after Google’s Gemini 3 received strong reviews,” Tsutomu Yamada, from Mitsubishi UFJ eSmart Securities Co, told Bloomberg. 

Schulman observed that in the short run, SoftBank’s sale of NVIDIA stock looked like a wise move, as if the latter foresaw the dip and exited at the right time. However, investors didn’t fully buy its strategic bets. “Nonetheless, based on past quirks and eccentricities, every new ambitious Softbank move gets priced with scepticism,” Schulman said. 

The SoftBank stock decline had a rippling effect on the global tech stocks. Between November 11 and 26, while SoftBank shares declined by 28.35%, NVIDIA’s shares fell by 6.68% and Microsoft was down by 4.56%. Meanwhile, Apple, Google and Meta, which competed with OpenAI, saw their stock prices rise by 0.84%, 9.78% and 1.04%, respectively.  

What to Make of the Future?

Schulman noted that SoftBank may remain in a phase where it has become a meme of itself, replaying episodes of “overconfidence and reinvention.” 

He further noted that when the company swaps its investments for another ambitious tech bet, investors are unsure whether it marks a good strategy or should remind them of past mistakes, such as WeWork, Oyo, Zemu and others. 

Investors are watching to see whether the company will adjust its risk approach or shift its strategy as these markets evolve in 2026. 

“AI is a game-changer and will remain a structural growth theme in 2026,” Christian Nolting, global chief investment officer at Deutsche Bank, noted in their market outlook report. At the same time, he urges caution: “Overinvestment and electricity shortages could dampen expectations.”

Similarly, Vanguard Funds noted that while AI spending on infrastructure, chips and data centres could support faster-than-expected expansion, the investment management firm cautioned that it may not guarantee a bull run in equities. 

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