SoftBank shares jump 18% as investors buy AI and chip stocks

In short: Investors piled back into AI and chip-related stocks, sending SoftBank shares up more than 18% and pushing Japan’s Nikkei 225 to a record.

What's going on

SoftBank Group shares jumped more than 18% in Tokyo on Thursday. The move helped lift Japan’s Nikkei 225 stock index, which rose 5.7% by lunchtime and passed 62,000 points for the first time.

The rally came as investors returned to technology stocks after a three-day national holiday in Japan. Other chip and electronics-related companies also rose sharply, including Renesas, Tokyo Electron, and Advantest. The Financial Times also noted that Japanese authorities used the market break to intervene to support the yen, Japan’s currency.

SoftBank is watched closely because it has big stakes in AI-related businesses. It is one of the largest investors in OpenAI, the company behind ChatGPT, and it is committing another $30bn to OpenAI. SoftBank also owns about 90% of Arm, a UK chip designer whose shares have risen about 60% in a month, according to an analyst quoted by the FT.

What to watch

SoftBank reports annual results next week, which could give investors more detail on how it plans to fund further AI investments. Analysts also pointed to SoftBank’s “loan-to-value ratio” (a simple debt yardstick, like checking how big your mortgage is compared with your home’s value). One analyst said the recent share jump may have eased concerns about that ratio.

Source: Financial Times