SoftBank Shares Face Pressure Amid Strategic Pivot

SoftBank JP3436100006

SoftBank Group's equity has entered a corrective phase in January, surrendering a significant portion of its impressive 2025 gains. The shift in momentum comes as investors take profits and react to a key analyst downgrade, even as the Japanese conglomerate continues to aggressively fund its artificial intelligence ambitions. This creates a complex backdrop ahead of the company's upcoming quarterly earnings report.

A primary catalyst for the recent weakness was a rating change for Arm Holdings by BofA Securities on January 13. The analysts moved their recommendation from "Buy" to "Neutral," simultaneously reducing their price target from $145 to $120. Their rationale highlighted several concerns:
* Smartphone Headwinds: Rising memory costs are pressuring the smartphone segment.
* Growing SoftBank Dependency: SoftBank itself now accounts for 25–30% of Arm's licensing revenue, raising questions about inter-company financing and the sustainability of this revenue stream.
* Forecasted Decline: License revenue for fiscal 2026 is projected to fall by approximately 5%, when adjusted for contributions from SoftBank.
* Limited Near-Term Catalysts: The rollout of the CSS architecture is largely complete, offering few immediate growth drivers.

This assessment carries substantial weight for SoftBank, as Arm remains one of the most valuable holdings in its extensive investment portfolio. The market is now scrutinizing the implications of this growing financial interdependence.

Share Price Retreat Follows Recent Stock Split

The Tokyo-listed shares have declined sharply from their January peak. After reaching an intra-month high of 4,735 yen on January 6, the price fell to 4,010 yen by January 16—a drop of roughly 15%. This pullback has occurred amidst a cumulative trading volume of 464.4 million shares for the month.

This correction follows closely on the heels of a 4-for-1 stock split that took effect January 1. The split was implemented to improve accessibility for retail investors after the share price multiplied throughout 2025.

The weakness is also evident in SoftBank's U.S.-traded ADRs (OTC: SFTBY). These securities closed at $12.55 on January 16, down from their level of approximately $14.80 at the start of the year.

Unabated AI Spending Contrasts with Market Weakness

Despite the share price pressure, SoftBank shows no signs of slowing its massive commitment to artificial intelligence. A series of recent announcements underscore this relentless focus:
* November 5, 2025: Formation of the "SB OAI Japan" joint venture with OpenAI.
* November 26, 2025: Completion of the acquisition of Ampere Computing Holdings.
* December 29, 2025: Announcement of a $4 billion takeover of DigitalBridge for AI infrastructure.
* December 31, 2025: Finalization of an additional $22.5 billion investment in OpenAI.
* January 9, 2026: OpenAI and SoftBank revealed a joint $1 billion investment ($500 million each) into SB Energy to support the Stargate data center project.

The SB Energy project, located in Milam County, Texas, involves building and operating a 1.2-gigawatt data center. It is a component of the broader $500 billion Stargate program unveiled in January 2025.

Diverging Analyst Views Create a Mixed Picture

Current analyst perspectives on SoftBank are not uniform, presenting investors with conflicting signals. In a contrasting view to BofA's caution on Arm, BTIG initiated coverage of SoftBank on January 6 with a "Buy" rating and a 5,400 yen price target. BTIG's analysts cited the company's unique positioning within the AI and robotics sectors as the foundation for their optimistic stance.

Technical and Fundamental Catalysts Ahead

From a chart perspective, the stock is in a clear short-term downtrend, having broken below key support levels established in the first week of January. On a split-adjusted basis, the 52-week range of 1,432.5 to 6,923.8 yen highlights the extreme volatility that has accompanied the group's aggressive investment strategy.

All eyes now turn to SoftBank's third-quarter earnings for fiscal year 2025, scheduled for release on February 12. The report will be pivotal, with market participants keenly focused on the performance of the Vision Funds and the progress of the company's vast AI investments. The previous quarter featured a net profit of $16.6 billion—more than double the year-earlier result—driven largely by valuation gains on the OpenAI stake. The upcoming figures will help clarify whether the recent share price decline is a temporary consolidation or the start of a more significant reassessment.