SoftBank plunges 13% as AI chiefs urge slower development
What's the story
SoftBank Group's shares plummeted over 13% in Tokyo on Monday, marking their biggest fall since late June. The decline comes after the heads of Anthropic and OpenAI urged developers to slow down artificial intelligence (AI) development for safety reasons. The news has raised market concerns about the Japanese tech investor's increasing debt to fund its AI investments.
Investment concerns
SoftBank's exposure to AI investments
SoftBank is one of OpenAI's biggest investors, with its total investment in the ChatGPT maker expected to reach nearly $65 billion by October.
The company's founder Masayoshi Son has launched several multibillion-dollar AI projects, despite investor concerns over their uncertain revenue timelines.
This aggressive strategy has left SoftBank exposed to extreme volatility in its stock price.
Safety worries
Calls for cautious approach to AI development
The recent calls for a more cautious approach to AI development by Anthropic CEO Dario Amodei and OpenAI CEO Sam Altman have further fueled investor concerns. They cite safety risks as the reason for their stance.
This has raised questions about the potential returns on SoftBank's massive investments in AI, especially given Son's aggressive funding strategy and the uncertain revenue timelines of some projects.
Market outlook
Uncertainty over future AI investments weighs on market sentiment
SoftBank's stock has fallen some 30% from its June peak, amid fears of a possible delay to OpenAI's initial public offering (IPO).
The company had reported a profit for the June quarter, aided by gains from its stakes in Intel Corp. and ByteDance, the parent company of TikTok.
Despite these gains, uncertainty over future AI investments continues to weigh on market sentiment toward SoftBank's stock performance.