SoftBank Group's 11% plunge in Tokyo dragged Arm Holdings more than 5% lower in pre-market trading, as the AI trade that lifted both stocks 268% and 100% respectively this year faces its sharpest test yet.
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Arm drops 5% pre-market as SoftBank plunges 11% on AI jitters
SoftBank Group's 11% plunge in Tokyo dragged Arm Holdings more than 5% lower in pre-market trading, as the AI trade that lifted both stocks 268% and 100% respectively this year faces its sharpest test yet.
Arm Holdings Plc shares fell more than 5% in pre-market trading Thursday after its majority shareholder SoftBank Group Corp. tumbled 11% in Tokyo, as jitters over AI competition and a broader tech selloff hit the sector.
"SoftBank's decline reflects growing concern that the AI investment cycle may be peaking, with OpenAI competitors moving toward public markets and potentially diluting the value of SoftBank's largest holdings," said Rachel Kim, semiconductor analyst at Edgen.
SoftBank shares closed at 7,449 yen ($46.53) in Tokyo, erasing a portion of the stock's more-than-doubling over the past two months. The Japanese conglomerate's $300 billion equity portfolio counts OpenAI as its largest single investment at roughly 25% of total value, followed by its stake in British chip designer Arm. SoftBank had unveiled a $52 billion data-center project in France earlier this week, adding to its AI infrastructure bets.
The selloff comes as OpenAI's rivals accelerate plans to go public. SpaceX, which acquired OpenAI competitor xAI in February, plans to sell about $75 billion in shares in an IPO targeting a June 12 debut. Anthropic confidentially filed for an IPO Monday, putting it on track for a public listing as early as this fall. OpenAI itself has been preparing to file confidentially for an IPO, the Wall Street Journal reported last month.
Arm shares had surged 68% in May and 268% year to date through June 2, driven by enthusiasm over its CPU architecture's role in AI inference and its partnership with Nvidia Corp. Nvidia's Grace Blackwell superchip combines Arm-based Grace CPUs with Nvidia's Blackwell graphics processing units, and the company's upcoming Vera CPU — built on custom Arm cores — targets a $200 billion total addressable market for agentic AI, according to Nvidia's May earnings call. Arm guided to fiscal first-quarter revenue of $1.26 billion, up 20% year over year, with adjusted EPS of $0.40.
For investors, the question is whether the pullback represents a buying opportunity or the start of a correction. Arm trades at a significant premium to semiconductor peers, with Wall Street expecting adjusted EPS growth of 23% this fiscal year accelerating to 41% next year. The stock's 268% year-to-date gain through June 2 had priced in much of that optimism before Thursday's decline. SoftBank's 11% drop also raises questions about the valuation of its broader AI portfolio, which has benefited from the same wave of enthusiasm that lifted Arm and OpenAI's private valuation.
This article is for informational purposes only and does not constitute investment advice.
