SoftBank’s OpenAI bet raises concerns about dwindling funding

SoftBank’s rise to become Japan’s most valuable company has put a spotlight on the conglomerate, raising questions about whether it is taking too much risk with its lucrative bet on artificial intelligence.

Shares of the Japanese technology investment giant, led by founder Masayoshi Son, have soared nearly 70 percent this year on investor enthusiasm for AI, fueled by a surge in the value of chip designer Arm Holdings and expectations that OpenAI could see an initial public offering this year.

The rally helped SoftBank dethrone Toyota in market shares earlier this week, cementing a major turnaround at a company that in the past few years has been reeling from losses related to its failed WeWork bet. Losses on SoftBank’s combined investment in WeWork exceeded $14 billion.

Analysts CNBC spoke to warned that the market’s renewed optimism in SoftBank is also masking balance sheet risks.

“Softbank has made a very profitable bet on AI with high returns and high risk,” said Gil Luria, head of technical research at Davidson equity markets.

The company participated in OpenAI’s funding round last year at a reported $300 billion and has continued to deepen its involvement. It secured a $40 billion bridge loan in March to help finance additional investments in OpenAI and general corporate purposes.

At the end of 2025, SoftBank had about 16.3 trillion yen (about $104 billion) in interest-only debt, according to its financial statement.

S&P Global in March estimated that OpenAI would account for about 30% of SoftBank’s investment fund, on par with Arm Holdings, following the group’s additional $30 billion investment in ChatGPT developer.

S&P Global Ratings revised SoftBank’s credit outlook to negative in March, saying the company’s asset shortfalls and the quality of its portfolio, as well as its financial strength “may be impaired by additional large investments in OpenAI.”

For some investors, the concern is not just the amount of debt, but the overreliance of SoftBank’s future on a single company.

“Softbank’s risk profile is big and getting bigger. If OpenAI fails to deliver there could be inflation for SoftBank,” said Richard Windsor, founder of equity research firm Radio Free Mobile.

The growing reliance on OpenAI has also raised questions about what happens when enthusiasm around AI standardization cools.

“If OpenAI doesn’t successfully IPO at the current valuation or better, that would put pressure on Softbank given the size of the exposure,” Luria said. OpenAI’s valuation is $852 billion following a record $122 billion funding round in March.

Jay R. Ritter, professor emeritus at the Warrington College of Business, said SoftBank’s power magnified both the upside and downside of the trade. “Buying Softbank is part of OpenAI’s bet,” he said. “If OpenAI does well, the profit is huge. But if OpenAI and other investments don’t do well, the profit will hurt Softbank.”

He also pointed to other weak spots in SoftBank’s full portfolio, including underperforming companies like Coupang and Didi, while noting that the company’s heavy losses from WeWork show the risks of concentrated bets.

SoftBank through its Vision Fund has poured billions into WeWork, once among the world’s most valued startups, but the office-sharing business’s valuation has fallen amid concerns about its business model and corporate governance. The Covid pandemic has made their financial problems worse.

The company, once valued at $47 billion, filed for bankruptcy protection in the US in 2023, forcing SoftBank to absorb huge losses.

Some investors argue that risk remains manageable. Richard Kaye, a portfolio manager at Comgest, said SoftBank’s assets still adequately cover its debt obligations and that the company’s loan-to-value ratio remains below 25%.

“Softbank’s debt is sustainable because the loan to value, the total loan compared to its immediate equity value, is less than 25%,” said Kaye, adding that lenders are still willing to extend their funds compared to SoftBank’s shares.

He said OpenAI’s disappointment would not cause a payment problem. “OpenAI’s disappointment will be seen as one setback, but it doesn’t have to cause inflation as Softbank has enough equity to offset those losses.”

Son, in a recent interview with CNBC, defended SoftBank’s aggressive push into AI, calling the technological revolution “50 times bigger” than the dot-com boom and arguing that any future correction in AI-related stocks will represent a buying opportunity rather than a structural threat.

SoftBank did not immediately respond to CNBC’s request for comment.