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genai/news//The Financial Express
SoftBank's stock has climbed more than 90% so far this year, driven by strong optimism surrounding its AI-focused investments and technology portfolio.
SoftBank surpassed Toyota in market value for the first time since the 2000 dot-com bubble.
KEY POINTS
SoftBank's stock has risen over 90% in 2024, fueled by AI investment optimism.
SoftBank is expected to hold a 13% stake in OpenAI by October after a $65 billion commitment.
Arm Holdings' soaring valuation and easing AI competition concerns have boosted investor sentiment toward SoftBank.
The development marks the first time in over two decades that SoftBank has surpassed the automaker in market value, apart from a brief moment during Japan’s dot-com bubble in 2000.
AI boom powers SoftBank’s massive rally
The sharp rally shows the growing investor obsession with artificial intelligence-linked firms, as SoftBank continues to benefit from the global AI boom. The company’s stock has climbed more than 90% so far this year, driven by strong optimism surrounding its AI-focused investments and technology portfolio.
According to Bloomberg, market analysts have said that the shift highlights how investor preferences are rapidly moving away from traditional industries such as automobiles toward companies tied to artificial intelligence, semiconductors and data infrastructure.
“This epoch-making event symbolizes the AI boom,” Kazuhiro Sasaki, head of research at Phillip Securities Japan Ltd., told Bloomberg, pointing to rising expectations around major US tech listings and AI-driven capital flows.
OpenAI and Arm fuel investor confidence
The recent momentum of SoftBank has also been fuelled by reports that portfolio firms including OpenAI and SB Energy Corp. are preparing for potential US listings. SoftBank has reportedly committed close to $65 billion to OpenAI and is expected to hold around a 13% stake by October.
The company has additionally gained from the strong performance of Arm Holdings, whose valuation has surged alongside growing demand for AI chips and infrastructure following robust earnings from Nvidia Corporation. Investor concerns over rising competition from rivals such as Anthropic, Google and Elon Musk’s xAI have also eased in recent weeks, further improving sentiment around SoftBank’s AI bets.
Toyota hit by oil prices, EV transition challenges
It is reportedly said that Toyota has struggled amid a challenging global environment for automakers. Rising oil prices linked to tensions involving Iran, slowing global demand and the costly transition toward electric vehicles and software-driven mobility have weighed heavily on the sector.
“SoftBank has concentrated its management resources on AI-related businesses and has successfully ridden the broader global tech rally,” Tomo Kinoshita, global market strategist at Invesco Asset Management Japan Ltd., told Bloomberg.
“Toyota, meanwhile, has been hit by rising oil prices stemming from the Iran war, which raises the cost of operating vehicles and weighs on global auto demand,” he added.
AI firms reshaping Japan’s stock market
Analysts noted that while Toyota’s valuation could recover if energy prices ease later this year, long-term investor sentiment appears increasingly tilted toward AI and technology companies.
Japan’s memory-chip maker Kioxia Holdings has also emerged as one of the country’s top-valued firms, with a market capitalisation nearing 40 trillion yen.
“Over the longer term, AI-related companies are likely to command higher valuations,” Kinoshita said. “Their presence in Japan’s equity market will only continue to grow stronger.”