SoftBank's AI Ambitions Face Market Scrutiny After Project Setback

SoftBank shares hit a multi-year low after its 'Stargate' AI project stalls and credit markets signal rising default risk, fueled by a massive planned OpenAI investment.

Shares in SoftBank Group Corp. plunged by as much as 12.5% in a single trading session, hitting their lowest valuation since August 2025. The sharp decline was triggered by a significant setback within the company's flagship artificial intelligence initiative, raising urgent questions about the financial sustainability of its aggressive investment pace in this sector.

Credit Markets and Ratings Agencies Sound Alarms

The market reaction was compounded by growing unease in credit markets. The cost of insuring SoftBank's debt against default, as measured by its five-year credit default swap (CDS) spreads, widened to approximately 380 basis points. This marks an eleven-month high, up from around 347 basis points just days earlier, indicating heightened perceived risk among creditors.

This skepticism is shared by major ratings agencies. Earlier in March, S&P Global Ratings revised its outlook on SoftBank to "negative." The agency cited the planned additional $30 billion investment into OpenAI as a primary concern. S&P warned that such a high concentration in a single, unlisted company could impair the liquidity of SoftBank's overall portfolio and exert downward pressure on its creditworthiness. Upon completion, the OpenAI stake would constitute roughly 30% of SoftBank's investment assets—a share comparable in size to its holding in chip designer Arm Holdings.

Funding the AI Push: Asset Sales and Bridge Loans

To finance its costly AI ambitions, SoftBank has recently turned to divesting core holdings. The company has sold down portions of its investments in both T-Mobile US and Nvidia. Furthermore, reports indicate that negotiations are underway to secure bridge financing of up to $40 billion to meet its forthcoming financial commitments to OpenAI.

The "Stargate" Stall: A Symptom of Broader Challenges?

The immediate catalyst for the stock sell-off was news of a partial halt to the ambitious "Stargate" project. According to reports, partners Oracle and OpenAI have abandoned plans to expand a major AI data center in Texas. This facility was a key component of the wider Stargate initiative, a project in which SoftBank plays a major role.

Whether this setback represents an isolated hiccup or signals deeper structural difficulties in executing large-scale AI projects will be critical for investor sentiment in the coming weeks. The market's final verdict on the viability of SoftBank's high-stakes AI strategy may hinge on the answer.