SoftBank market cap drops by about $32 billion as Asian AI stocks slide on valuation jitters
A woman uses her mobile phone as she walks past the logo of Japan’s telecommunications giant SoftBank in Tokyo on December 25, 2013.
Toru Yamanaka | Afp | Getty Images
Japan’s SoftBank Group saw its shares plummet over 14% on Wednesday, mirroring the decline in Asian AI-related companies and following the trend of U.S. counterparts. Investors expressed concerns about overvalued stocks in the crowded market.
SoftBank, known for its extensive investments in AI across various sectors, experienced a $32 billion loss in market capitalization. This decline marks the largest single-day drop since August of the previous year.
The company holds a controlling stake in Arm Holdings and recently acquired Ampere Computing to enhance its AI data-center capabilities. Arm Holdings, listed on Nasdaq, also witnessed a 4.71% decrease in its share value.
SoftBank has supported prominent AI developers like OpenAI and startups such as OpusClip and Tempus AI. The company’s market capitalization has now shrunk by nearly $50 billion in just two days, with a 7% drop recorded the day before.
Other tech stocks in Japan also experienced declines, with companies like Advantest, Renesas Electronics, and Tokyo Electron posting losses. South Korean giants Samsung Electronics and SK Hynix, as well as Taiwan’s TSMC, also saw decreases in their share prices.
The market downturn extended to U.S. firms like Palantir, Oracle, AMD, Nvidia, and Amazon. Analysts are cautious about the inflated valuations in the AI sector, drawing parallels to the dot-com bubble of the late 1990s.
Despite the recent sell-off, some experts believe it is temporary and not indicative of a long-term trend. Market volatility, coupled with concerns about high valuations, has led to a risk-averse sentiment among investors.
