SoftBank Group Corp. dropped 3.2% to ¥6,367 on Wednesday, extending weakness after a sharp decline in Arm Holdings, a core asset in SoftBank's portfolio. Arm fell almost 6% in U.S. trading on Tuesday after HSBC moved the chip designer's rating from Buy to Hold, arguing that much of the firm's AI growth had already been reflected in its share price.
Arm's stock has experienced a dramatic run in 2026, rallying by more than 140% as markets positioned the company to benefit from surging AI demand for advanced processors. The company generates revenue through royalties tied to its chip platform designs, deployed across consumer electronics and increasingly in servers used for AI workloads.
Despite long-term confidence in Arm's prospects, HSBC flagged immediate limitations to further upside. The bank cited constrained production capacity at leading contract manufacturer TSMC as a key bottleneck - a restriction that curtails shipments of Arm-based AI server CPUs and therefore compresses short-term earnings and share momentum. HSBC's stance that near-term gains are limited led investors to reassess expectations that had driven much of Arm's earlier price gains.
Market participants also weighed statements made by SoftBank's CEO at the company's annual SoftBank World 2026 event in Tokyo on July 14. Masayoshi Son outlined sweeping forecasts for AI investment and economic impact, saying global AI infrastructure would require $5 trillion in annual spending by 2040 - roughly ¥800 trillion - and predicting AI-generated revenue could equal 20% of global GDP by that year. Son described fears of an AI bubble as "absurd."
Those remarks appeared to trigger profit-taking among investors, who noted the presentation did not provide an explicit methodology for the large numbers cited and did not directly address nearer-term monetization pressures facing SoftBank.
Another material headwind for SoftBank is the delayed expectation around an OpenAI initial public offering. SoftBank's cumulative investment in OpenAI is expected to exceed $60 billion by the end of 2026, and the market had long anticipated a near-term IPO that would create a significant liquidity event. With the listing now widely expected to be postponed into 2027, the timeline for realizing that value has extended, raising questions about SoftBank's short-term liquidity position and its ability to redeploy capital from that investment.
The combination of a downgrading of Arm, investor skepticism following executive projections, and a pushed-out OpenAI IPO date helps explain the downward pressure on SoftBank's stock. Each of those elements touches different parts of the technology and investment landscape - from semiconductor production constraints to the timing of major private-to-public exits - and together they have reduced the near-term upside perceived by the market.
Contextual note - Arm's royalty-based model, the TSMC capacity constraints, Son's projections at SoftBank World 2026, and the timing of an OpenAI IPO are the specific factors cited by investors and analysts as driving recent price moves for SoftBank and its holdings.