SoftBank Shares Face Pressure Amid AI Investment and Sector Headwinds

SoftBank Group Corp. made a significant strategic move in robotics and physical artificial intelligence this week, yet the market's immediate reaction was decidedly negative. The Japanese investment conglomerate's stock declined sharply, pressured by a dual threat: a downgrade for its key holding, Arm Holdings, and new U.S. tariffs targeting high-performance semiconductors.

• Stock Performance: SoftBank's shares fell approximately 4.5% in Asian trading, with intraday losses exceeding 5%.
• Major Investment: The group led a Series C funding round worth nearly $1.4 billion for U.S.-based startup Skild AI.
• Valuation Surge: Skild AI's valuation soared to over $14 billion, tripling in just seven months.
• Analyst Action: Bank of America downgraded Arm stock from "Buy" to "Neutral" on January 13, citing concerns over future licensing revenue.
• Policy Risk: New 25% U.S. tariffs on specific AI chips introduced geopolitical uncertainty, weighing on Japanese tech stocks.

The centerpiece of SoftBank's recent activity is its lead role in a substantial $1.4 billion funding round for Skild AI. The Pittsburgh-based company, which is developing a "general-purpose brain" for robots, saw its valuation jump to over $14 billion. This figure represents a threefold increase from its valuation just seven months prior. Notable participants in the round included Nvidia's venture arm, NVentures, Jeff Bezos's Bezos Expeditions, and Salesforce Ventures.

For SoftBank, this investment is a clear strategic commitment to advancing AI into the physical world, moving beyond pure software models into robotics integrated with powerful AI. Skild AI has rapidly scaled its commercial footprint, projecting annualized revenue to reach around $30 million in 2025 from a standing start.

Mounting Challenges from Core Holdings and Trade Policy

Despite this forward-looking investment, near-term market sentiment turned sour. The downgrade of Arm Holdings by Bank of America analysts cast a shadow. The strategists projected a potential 5% decline in Arm's licensing revenue for 2026, primarily due to weaker demand in the smartphone sector. Following the downgrade, Arm's stock dropped almost 4% to close at $106.75, negatively impacting the calculated net asset value of SoftBank's portfolio.

Compounding these concerns is renewed geopolitical friction. An executive order signed by U.S. President Trump imposes a 25% tariff on certain high-performance AI chips. This announcement triggered notable anxiety across Japan's technology sector. While the Nikkei 225 index initially climbed 1.48% to a record high of 54,341 points on January 14, SoftBank shares significantly underperformed. The broader index then turned negative the following day, declining roughly 0.9%, with tech stocks reacting to the tariff news and SoftBank falling as much as 5.6%.

Should investors sell immediately? Or is it worth buying SoftBank?

Balancing Long-Term Vision Against Short-Term Cyclicality

The stock's reaction highlights the tension between expensive long-term growth narratives and immediate cyclical risks. Skild AI's valuation, at nearly 460 times its annualized revenue, echoes the aggressive valuation levels seen during the early phase of SoftBank's Vision Fund.

This contrasts sharply with growing apprehension around the cyclical nature of Arm's core semiconductor business. The Bank of America downgrade signals increasing market scrutiny of rich valuations when growth is not firmly underpinned by rising near-term unit sales and revenue. Furthermore, SoftBank's deep integration into global supply chains through Arm and its various AI investments leaves it exposed to escalating trade tensions, particularly between the U.S. and China, which can directly affect the valuation of its holdings.

Market Awaits Arm's Quarterly Report

Investors are now looking ahead to the next key catalyst: Arm Holdings' third-quarter earnings report, scheduled for February 4, 2026. The trajectory of its licensing revenue will be scrutinized to assess whether the risks outlined by Bank of America are materializing or if they can be mitigated for now.

From a technical perspective, SoftBank's share price is approaching crucial support levels near 4,200 yen. A breach of this level, amid persistent worries over U.S. tech valuations and chip tariffs, could invite further selling pressure.

In the coming quarters, the market will closely monitor the pace and scale at which Skild AI's technology can be integrated into SoftBank's broader robotics ecosystem. The long-term potential of this high-value investment remains a counterweight to short-term pressures from the semiconductor cycle.