SoftBank shares plunge as Google’s Gemini sparks fears over OpenAI’s competitiveness

SoftBank Group shares tumbled to a 2½-month low on Tuesday, extending a sharp two-day selloff triggered by concerns that Alphabet’s latest Gemini artificial intelligence model could intensify competitive pressure on OpenAI — one of the Japanese conglomerate’s most important investments.

The stock fell as much as 11% in Tokyo, following a 10.9% drop in the previous session before Japan’s long weekend.

The back-to-back declines stood out even for SoftBank, whose shares are known for their volatility.

SoftBank ended down 9.95%, shaving 338 points off the Nikkei’s final tally — even as Alphabet’s US shares hit a record high after the Gemini launch.

The Nikkei 225 erased most of its early gains to close nearly flat, rising just 0.07% to 48,659.52.

The Topix slipped 0.21% to 3,290.89.

“Investors were concerned about the competitiveness of ChatGPT from OpenAI, in which SoftBank Group invests, with Google’s new Gemini,” said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.

“Typically, Japan’s AI-related heavyweights move in the same direction, but today SoftBank Group fell on its own reason,” said Shimada.

The Gemini 3 is receiving rave reviews, with Salesforce CEO Marc Benioff also stating that he will ditch ChatGPT for the Gemini 3.

Concerns mount over OpenAI’s position

Tuesday’s slump came even as several Japanese AI-related stocks advanced.

Chip testing equipment maker Advantest rose, tracking a rally in global semiconductor shares during Japan’s long weekend. SoftBank was the notable outlier.

SoftBank’s heavy exposure to OpenAI has become central to investor sentiment.

The conglomerate reportedly approved the final tranche of its planned $30 billion investment in the US AI firm last month, though that commitment may be scaled down to $20 billion if OpenAI fails to fully convert itself into a for-profit entity by year-end.

OpenAI recently completed a recapitalization that formalised nonprofit oversight while restructuring its commercial arm into a public benefit corporation called OpenAI Group PBC.

SoftBank reported a net profit of ¥2.5 trillion ($16.6 billion) for the July–September quarter, its third straight profitable period, helped by a surge in Vision Fund valuations.

The Vision Fund recorded investment gains of ¥3.5 trillion, including ¥2.16 trillion from its OpenAI stake.

Spending commitments raise wider questions

SoftBank’s close relationship with OpenAI — including a partnership on a $500 billion US infrastructure venture — has become another source of anxiety.

OpenAI has committed to more than $1 trillion in spending over the next five years, a target many analysts argue is unrealistic given that the company is not yet profitable.

Recent comments from OpenAI executives suggesting the need for government support added to questions around funding, while Nvidia’s earnings reinforced concerns about stretched AI valuations and circular investment flows in the industry.

Investor Michael Burry, known for predicting the 2008 financial crisis, last week accused OpenAI of being the “linchpin” in a web of circular financing across the AI ecosystem.

SoftBank’s rapid decline underlines how quickly sentiment can shift in AI-related stocks.

Fears that OpenAI is ceding ground to Alphabet have wiped out more than 40% of its market value in just a matter of weeks.

The post SoftBank shares plunge as Google’s Gemini sparks fears over OpenAI’s competitiveness appeared first on Invezz