Japan's Nikkei share average recovered from early losses to rise around 1% to 64,082.36 by midday Tuesday, driven by a sharp rebound in technology investor SoftBank Group. According to Reuters, the Nikkei initially traded lower before recovering, with the broader Topix remaining little changed at 4,057.06. SoftBank shares jumped 9.13%, clawing back part of the 10.7% decline recorded in the previous session after the selloff was triggered by weakness in AI-linked stocks. AI and semiconductor-related stocks also advanced, with memory-chip maker Kioxia gaining 2.73%, while chipmaking equipment suppliers Advantest and Tokyo Electron rose 0.8% and 0.33%, respectively. However, banking stocks declined, with Mitsubishi UFJ Financial Group falling 0.83% and Sumitomo Mitsui Financial Group losing 1.98%, keeping the broader Topix subdued.
SoftBank secured a $11.87 billion loan to support its investment in OpenAI, up from its earlier target of $10 billion, according to people familiar with the matter. The Japanese conglomerate sealed the two-year facility last week, attracting commitments from around 20 banks. This latest borrowing adds to SoftBank's wave of recent debt financing activities tied to its OpenAI bet, including a $10 billion margin loan backed by its OpenAI stake and a potential $10-20 billion bond sale. The company is also repaying the balance of a $40 billion loan obtained earlier this year, with $25.9 billion due on September 15 ahead of maturity in March next year. SoftBank is also accelerating repayment on some of its short-term loans as part of its debt management strategy. The group is also planning a ¥1 trillion ($6.5 billion) retail bond sale and has arranged a $10 billion loan linked to its OpenAI stake, with the company also financing other major transactions including the planned acquisitions of ABB Robotics and DigitalBridge.
The market decline followed weekend comments from Anthropic CEO Dario Amodei, Elon Musk of xAI, and OpenAI CEO Sam Altman, who all backed calls to slow the rate at which AI companies advance model capabilities. Altman later confirmed that OpenAI would not proceed with an IPO this year, citing safety concerns as the primary driver. Altman said the risks posed by AI to humanity were "unacceptable" and indicated that companies needed to pace the development of frontier AI models. The concerns were further amplified by Anthropic's release of a threat intelligence report on Thursday detailing how several actors had used its Claude AI models for activities ranging from weapons development and cyber operations to surveillance and fraud. Anthropic is also planning to introduce additional safeguards, including assessments by independent third parties, according to reports. Alarm about the potential harm from AI grew this week when Anthropic researcher Jacob Coxon resigned, stating that the "people building AI earnestly believe that it could kill us all by the end of the decade."
According to Reuters, investors were reassessing whether the comments from major US AI executives would actually lead to a sustained slowdown in AI investment by major technology companies. Market breadth remained positive on the Tokyo Stock Exchange's Prime Market, with 57% of more than 1,500 stocks traded advancing, 38% declining and 4% unchanged. Shares of SoftBank are down around 30% from a June peak, after Bloomberg News and other outlets reported OpenAI's initial public offering could be delayed. Investors are particularly concerned about SoftBank founder Masayoshi Son's unwavering faith in AI's potential, who has initiated a flurry of multibillion-dollar AI projects with uncertain timelines about payoff in revenue. "There's worry that OpenAI's value may not be as high as previously expected," said Yugo Tsuboi, chief strategist at Daiwa Securities. "The market is on alert because we do not yet know how much the pace of AI development will slow down." The scale of SoftBank's commitments has raised concerns over whether AI-related investments will generate meaningful returns quickly enough, particularly if the pace of development slows.
The selloff adds to investor concerns around AI safety regulations, with U.S. President Donald Trump on Sunday likening AI critics to "very negative forces" and stating he wanted to make sure that the U.S. remains the industry leader. However, the U.S. and Chinese governments are expected to hold AI safety talks as part of bilateral discussions taking place this month, according to Reuters. AI-related trades have powered much of the gains in global equities since OpenAI released ChatGPT in 2022, but more recently cyberattacks by rogue AI agents and public discontent with data centre construction have raised opposition to the industry's development. Despite doubts around AI's investment prospects, SoftBank reported a profit in the June quarter, helped by big boosts from its stakes in Intel Corp. and TikTok developer ByteDance Ltd. Despite Monday's sharp decline, SoftBank remains above its 52-week low of ¥3,365, while its 52-week high stands at ¥9,074, though the latest recovery highlights the growing sensitivity of SoftBank's valuation to the outlook for AI spending, OpenAI's future valuation and the ability of its large-scale investments to generate returns.
