SoftBank shares slide 13% after AI chiefs sound alarm on safety

SoftBank Group Corp.'s shares plummeted 13% on Monday, marking their steepest decline in almost three months. The sharp drop came after leaders of AI companies Anthropic PBC and OpenAI warned against accelerating artificial intelligence development due to safety concerns. This news has fueled investor apprehension about the Japanese tech investor, who is increasingly leveraging debt to fund various AI ventures.

SoftBank, a major backer of OpenAI, has committed to investing nearly $65 billion in the ChatGPT maker by October. Shares of SoftBank plummeted more than 13% in Tokyo on Monday, their biggest decline since late June.

The market's concern stems from founder Masayoshi Son's unwavering belief in AI's potential. Son has spearheaded a series of multibillion-dollar AI projects, despite the uncertainty surrounding their revenue-generating timelines. Son's dismissive attitude toward bubble talk has exposed SoftBank to significant volatility. To finance his AI-driven initiatives, the company plans to issue a ¥1 trillion ($6.5 billion) retail bond and take on a $10 billion loan tied to OpenAI shares.

SoftBank is also contemplating building data centers worldwide to support its AI endeavors. However, recent developments in the AI sector have raised doubts about the value of OpenAI, one of SoftBank's biggest investments. Anthropic and OpenAI have pledged to curb the development of advanced AI models following a series of security breaches. OpenAI co-founder Sam Altman announced that the company will not list in 2026.

Yugo Tsuboi, chief strategist at Daiwa Securities, expressed worry that OpenAI's value may not be as high as previously anticipated, leading to heightened market alertness. SoftBank's substantial leverage has impacted its share price, which has dropped around 30% from its June peak. The decline is attributed to OpenAI's potential IPO delay, as well as concerns about fierce competition in the AI sector and numerous security breaches.

Despite these challenges, SoftBank posted a profit in the June quarter, driven by substantial gains from its stakes in Intel Corp. and ByteDance, the developer of TikTok.