Inside SoftBank’s $60 Billion AI Wager: The Balance-Sheet Risks and the Race for an OpenAI IPO

Jefferies: “Underperform” and a ¥3,140 Target

The most pointed equity-side warning came from Jefferies, which downgraded SoftBank to “Underperform” and slashed its price target from ¥5,118 to ¥3,140—a level that implied roughly 19% downside from the prevailing share price .

Jefferies’ thesis raises three structural concerns:

• Valuation integrity: Because SoftBank supplied approximately 85% of the capital in OpenAI’s recent funding rounds, the bank argues that the rising private valuation—which has climbed from $150 billion to over $800 billion—is substantially self-funded and inflates SoftBank’s own reported net asset value .
• Concentrated exposure: The OpenAI position has ballooned to nearly a third of SoftBank’s total investment assets. More than 50% of its portfolio is held in illiquid private-market instruments, making the group’s balance sheet unusually brittle .
• Related-party payments: SoftBank pays OpenAI roughly $3 billion per year for services in Japan, while paying approximately $200 million to Arm Holdings quarterly—a figure that represents about 16% of Arm’s revenue. These flows create a self-reinforcing loop and have drawn corporate-governance questions .

How the $40 Billion Bridge Loan Turned Into an IPO Bet

To fund successive rounds of OpenAI investment, SoftBank raised a $40 billion unsecured bridge loan . The debt was structured on the expectation that OpenAI would soon go public, providing a liquid exit at or above the $730–$840 billion valuation range set by private fundraising rounds .

If an IPO materializes at those levels, SoftBank can sell down part of its stake and comfortably service the loan. If the listing is delayed or prices lower than anticipated, SoftBank faces a gaping funding hole. Analysts estimate a ~$32 billion shortfall under a scenario where SoftBank must fully fund its remaining OpenAI tranches and Stargate data-center commitments without an equity market exit .

The exposure is enormous in absolute terms: by late March 2026, SoftBank’s OpenAI position was valued at roughly $79.6 billion, representing a $45 billion floating profit on paper . TD Cowen pegged the 11% stake at about $80 billion, but cautioned that the valuation is entirely untested by public markets .

Liquidity, Leverage, and the Wider Portfolio

The raw numbers paint a picture of a balance sheet stretched thin:

• OpenAI represents approximately 30% of SoftBank’s investment assets .
• Over 50% of the $320 billion portfolio consists of illiquid private assets .
• SoftBank’s loan-to-value ratio has expanded beyond historical comfort levels, with internal leverage estimated to have risen from roughly 16.5% to around 21.5% by December 2025 .

S&P has stated explicitly that the group’s liquidity and creditworthiness are likely to remain materially weakened for the foreseeable future, barring decisive asset sales or a swift public listing of the concentrated holdings .

Stock Volatility and a “Valuation Trap”

SoftBank shares have experienced sharp swings. The stock plunged 9.8% after the Stargate joint venture with Oracle collapsed, and by late March 2026 it was down nearly 45% from its October 2025 highs . While a rally into the May 2026 earnings report recaptured some ground, volatility remains elevated .

Jefferies went so far as to label SoftBank a “valuation trap,” warning that the premium attributed to the OpenAI stake may not survive contact with public-market scrutiny . The underlying concern is that the current private-mark valuation relies on SoftBank’s own capital recycling through ever-higher fundraisings—a loop that a public listing could break, rather than validate.

The IPO Dependency in Context

SoftBank’s entire capital structure now rests on an OpenAI IPO thesis . The $40 billion bridge loan is unsecured, and without a successful listing, the most viable repayment paths would likely involve selling down stakes in Arm or other core holdings—moves that could trigger a downward reassessment of the group’s entire portfolio value. Rating agencies and analysts alike have flagged that the combination of extreme concentration, rising leverage, and the absence of a clear near-term liquidity event places SoftBank’s credit profile in unusually vulnerable territory .

For now, SoftBank’s management emphasizes that its loan-to-value policy remains below 25% and that it holds sufficient cash to cover two years of bond redemptions . But those defenses rely on marks that a public market has yet to confirm—and on an IPO window that remains uncertain amid intensifying competition in the AI space.