---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 213316
conversation_id: eb75bdd4-ca02-4bfc-b558-bffa7efe6322
citations: 7
created: 2026-05-31 20:30:34Z
---

# What’s the bull case bear case for Softbank Group?

# SoftBank Group (9984 JP) — Bull / Bear Case

SoftBank Group sits at the epicenter of the AI capex cycle. Following its blow-out FY results (reported 13-May-2026) where net income quadrupled to a record ¥5.002T (~$31.6B) on a ¥6.99T Vision Fund profit driven almost entirely by OpenAI write-ups [11][13], the stock has become a pure-play option on Generative AI infrastructure — and the debate has polarized accordingly. Sell-side ratings remain net constructive at Buy 75% / Hold 15% / Sell 10%, with NTM P/E at 55.4x vs the 5-year average of 31.0x [12]. Bernstein (David Dai) most recently initiated 9984 at Outperform with a ¥8,200 target (~47% upside) and ARM at Outperform with $300 [15], while CLSA maintains High-Conviction Outperform with a SOTP target of ¥10,749 [1].

---

## The Bull Case

### 1. SoftBank is the cleanest listed proxy for OpenAI
- Post-recapitalization, SBG should own ~12.3% of OpenAI assuming a $30B total commitment [7]. Pre-money valuation cited at ~$260B, with consensus revenue trajectory from ~$4B in 2022 to ~$26B by 2026 (~10x NTM revenue, vs Anthropic at ~30x and Hugging Face at ~90x) [7].
- CLSA's key thesis: **if OpenAI hits a $1T valuation, SoftBank's 12% stake is worth ~$120B; netting out 18% minority interest in SVF2 and applying 0–30% discount = $39–69B for SBG shareholders, or 48–84% of the current market cap [1]**. Management itself flagged OpenAI as potentially becoming "the world's most valuable company" at the AGM [4].
- If OpenAI files an IPO at the rumored $1T valuation this year, SBG's ~13% stake would be marked at ~¥20T, generating gains of ~¥10T [13].
- CLSA's ¥10,749 target deliberately includes **only $1.5B in OpenAI** — i.e., the OpenAI option is essentially free under the current TP [1].

### 2. Persistent NAV discount creates a "heads I win, tails I don't lose much" setup
- The stock currently trades at >50% discount to NAV (CLSA flags 30% as "more reasonable"). Historically, this discount has narrowed pre-IPO of significant assets like Alibaba and Arm — OpenAI is positioned to be the next catalyst [2].
- Pro-forma NAV (post-OpenAI investment + April 2025 borrowing) was ¥27.4T, vs ¥25.7T ($172B) on a reported basis at Mar-25 [10].
- The CLSA SOTP at gross value (no discount) implies a NAV per share of ~¥17,336 [8].
- Catalysts: buybacks, new investments, IPO market activity (OpenAI structural cleanup, Stargate disclosure, narrowing of holdco discount) [9].

### 3. Arm remains the strategic crown jewel
- CLSA values Arm at $131B in its SOTP (vs current ~$167B), with SBG owning ~89–90% [8]. Arm contributes ¥10.77T (post-30% discount) to the SOTP and accounts for the largest slice of NAV.
- Arm sits at the center of every AI chip architecture (custom silicon, edge, datacenter accelerators) — providing optionality on the AI inference build-out independent of any single model winner.

### 4. Diversified AI infrastructure exposure beyond OpenAI
- SVF's AI strategy spans four pillars: (i) foundational infrastructure (Stargate datacenter partnership); (ii) cognitive models (OpenAI, Perplexity); (iii) robotics & hardware (China-based players like OneX, Skilled AI); (iv) sector-specific AI applications (cybersecurity, data analytics, drug discovery) [6].
- Robotics flagged as a "huge beneficiary of ASI" with Masayoshi Son expecting "an explosion of robotics" — Cristal Intelligence service launches December [5].
- Operating segments: Vision Fund segment income ¥2.881T (vs ¥26.07B year-ago); AI Computing revenue +12% y/y [17].

### 5. Improving balance sheet metrics
- LTV ratio fell to 17% in March from 20.6% in December [13]. Debt remained within limits despite the OpenAI commitment [12].
- Pro-forma deleveraging supported by Alibaba sell-down and asset monetization.

---

## The Bear Case

### 1. Concentration risk has become extreme
- After the Alibaba selldown, NAV is now dangerously concentrated in just three names: SVF (largely OpenAI/Arm/Bytedance), Arm itself, and SoftBank Corp [8]. Multiple sell-side analysts (Deutsche Bank, others) flagged "concentration risk resurfacing given increased exposure to Arm and OpenAI" [12].
- Concentration is also reinforced *within* SVF — SBG's $10.4B in OpenAI is a single-name bet, with an additional $30B committed Apr–Oct under "capped profit" arrangements [7].

### 2. OpenAI bet is binary — CLSA pegs downside at ~15% if it fails
- CLSA's own bear math: assuming the market has already discounted the $30B investment (82% via SVF2) by 50%, the residual exposure is ~$12.3B — implying **~15% downside if OpenAI turns out to be a loser** [3].
- StreetAccount summary directly: "Competitive threats to OpenAI leaves SoftBank vulnerable, adding to broader concerns about over-exposure to tech" — CFO Goto "did not rule out investment in OpenAI rivals though noted their generative AI plays are centered on OpenAI" [13]. The stock fell -7% over the week of FY results despite the print [16].
- There are credible competing platforms: Anthropic in talks to raise $30B+ at $900B valuation, plus Google/xAI/Meta. SoftBank has no realistic hedge in the model layer.

### 3. Internal dissent on Son's OpenAI commitment
- On 20-May, market reports flagged "Masayoshi Son's steadfast commitment to OpenAI is raising internal concerns at the firm" — the stock fell -3.9% on the headline [14]. This is the first time post-print that internal pushback has surfaced publicly, suggesting governance / capital-allocation risk if the OpenAI bet sours.
- Key person risk remains a perennial overhang: Son's strategic style (concentrated mega-bets, exits via IPO timing) means execution risk is highly correlated to one individual.

### 4. Stretched valuation already prices in significant upside
- NTM P/E at 55.4x is ~79% above the 5-yr average of 31.0x; EV/EBITDA 16.4x vs 5-yr avg 14.0x [12]. The market is no longer "cheap" on conventional metrics; the bull case requires the OpenAI write-up to keep compounding.
- Stargate / AI infrastructure capex requires the SOTP to absorb an assumed **¥1tn in extra parent debt** for new commitments [8] — if execution slips or AI capex returns disappoint, leverage re-emerges as a concern.

### 5. Capital return is being deprioritized in favor of AI capex
- SBG **cut its final dividend by 75% to ¥5.50 from ¥22.00** in conjunction with FY results [11]. Full-year dividend guidance of just ¥11 — a major signal that cash is being redirected to fund the OpenAI / Stargate commitments rather than returned to shareholders.
- For a holdco that traditionally relied on dividends + buybacks to narrow the NAV discount, this is a structural reset.

### 6. M&A discipline — recent signals are mixed
- ARM/SoftBank reportedly attempted to acquire Cerebras Systems and were rejected, just ahead of Cerebras's hot $185 IPO — a strategic miss on AI inference hardware. This raises questions about SBG's ability to compete with hyperscaler capital in landing top-tier AI assets.

### 7. Non-recourse financing structures introduce hidden leverage
- CLSA notes "non-recourse financing structures with no impact on LTV" [12] are being used — these are off-balance-sheet from an LTV perspective but still represent contingent claims on asset value.

---

## SOTP — How the Numbers Stack Up (CLSA, ¥bn)

| Asset | Valuation method | At 30% discount (TP) | Gross NAV |
|---|---|---|---|
| **Vision Fund** | SBG's equity portion, 20% discount to SBG's private mark | 5,300 | 7,572 |
| **ARM** | $131B mkt cap, 89% owned, less margin loans | 10,770 | 15,385 |
| **SoftBank Corp** | CLSA TP, Group owns 40%, less ¥0.5T asset-backed finance | 2,658 | 3,797 |
| **T-Mobile** | 85.3mn shares, less collar | 2,113 | 3,019 |
| **DT** | 225mn shares, less collar | 280 | 400 |
| **Alibaba** | 355mn shares less ¥3.8T collar | 0 | 0 |
| **Others** (NVDA, Symbotic, Lemonade) | | 1,029 | 1,470 |
| **Total Assets** | | **22,150** | **31,643** |
| **Parent Debt** | adj. for SBKK, margin loans, +¥1T Stargate | (6,660) | (6,660) |
| **NAV** | | **15,490** | **24,983** |
| **Per Share (¥)** | | **10,749 (TP)** | **17,336** |

Source: CLSA SOTP [8]. **OpenAI is NOT included** in the ¥10,749 TP — CLSA assumes only $1.5B in OpenAI, providing material upside optionality [1].

---

## Bottom Line — How to Frame It

| | Bull View | Bear View |
|---|---|---|
| **OpenAI** | Listed proxy for the leading GenAI franchise; $1T IPO scenario = 48-84% upside to current cap [1] | Concentration risk; ~15% downside if OpenAI loses; competitive threat from Anthropic, xAI [3][13] |
| **Arm** | Crown jewel; structural play on AI silicon | Already at $167B — much priced in |
| **NAV Discount** | >50% discount narrows historically pre-IPO [2] | Discount has persisted for years; structural for Japanese holdcos |
| **Balance Sheet** | LTV down to 17%; Alibaba monetization complete [13] | ¥1T+ extra parent debt for Stargate; non-recourse financing not in LTV [8][12] |
| **Capital Returns** | Buyback optionality remains [9] | Dividend cut 75% (¥22 → ¥5.50) — shareholder yield deprioritized [11] |
| **Governance** | Son's vision driving ASI platform leadership by 2030 [4] | Internal concern at firm over Son's OpenAI commitment [14] |
| **Valuation** | Cheap on SOTP; ~47% upside to consensus target [15] | NTM P/E 55x vs 31x 5-yr avg [12] |

The thesis cleanly resolves around one variable: **does OpenAI hit IPO at $500B–$1T+ in the next 12–18 months?** If yes, the NAV discount compresses and the bull case (¥8,200–¥10,749) plays out. If competitive disruption (Anthropic, model commoditization) or IPO delay/failure happens, the stock's elevated NTM multiple compresses and the bear case (-15% from current levels, per CLSA's own math) prints [3].

---

**Sources**
[1] CLSA — "Softbank Group: If OpenAI is worth US$1tn..." (13-Jun-2025, 607961957LinqAlpha.PDF)
[2] CLSA — same report, NAV discount section
[3] CLSA — same report, downside risk section
[4] CLSA — "Softbank Group: A vision of ASI" (27-Jun-2025, 607962937LinqAlpha.PDF)
[5] CLSA — same AGM report, OpenAI / robotics commentary
[6] CLSA — "Softbank Group: AI vision" (4-Jun-2025, 607961216LinqAlpha.PDF)
[7] CLSA — same AI vision report, OpenAI valuation & stake structure
[8] CLSA — SOTP table (607961216LinqAlpha.PDF)
[9] CLSA — Catalysts section (607962937LinqAlpha.PDF)
[10] CLSA — Historical NAV chart (607960933LinqAlpha.PDF)
[11] StreetAccount — SoftBank Group FY results metrics (13-May-2026)
[12] StreetAccount — Street Takeaways: SoftBank Group Q4/FY Earnings (15-May-2026)
[13] StreetAccount — SoftBank earnings beholden to OpenAI (14-May-2026)
[14] StreetAccount — APAC morning themes: Son's OpenAI commitment sparking internal concern (20-May-2026)
[15] StreetAccount — Bernstein initiates 9984.JP, ARM (18-May-2026)
[16] StreetAccount — Weekly AI movers (15-May-2026)
[17] StreetAccount — Metrics Recap: SoftBank Group Q4 Earnings (13-May-2026)

## Citations

- [11] **SoftBank Group reports FY net income attributable ¥5.002T vs FactSet ¥3.557T** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4677001&_doc_date=2026-05-13&_doc_product=SA>
- [12] **Street Takeaways - SoftBank Group Q4/FY Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4681155&_doc_date=2026-05-15&_doc_product=SA>
- [13] **SoftBank earnings beholden to OpenAI, Nissan sees light at end of tunnel** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4679341&_doc_date=2026-05-14&_doc_product=SA>
- [14] **APAC morning themes - Masayoshi Son's OpenAI commitment sparking internal concern at SoftBank** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4687490&_doc_date=2026-05-20&_doc_product=SA>
- [15] **Bernstein initiates 9984.JP, ARM** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4684855&_doc_date=2026-05-18&_doc_product=SA>
- [16] **Weekly AI movers include Ford Motor, Fanuc, and Softbank** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4683802&_doc_date=2026-05-15&_doc_product=SA>
- [17] **StreetAccount Metrics Recap - SoftBank Group Q4 Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4677025&_doc_date=2026-05-13&_doc_product=SA>

