The Nikkei 225 Index surged over 3.5% on May 21, its strongest session in weeks, closing at ¥61,940, propelled by a massive rally in SoftBank Group shares. The Japanese investment conglomerate jumped more than 20% in a single day, adding roughly $35 billion in market value, before extending gains on Friday for a two-day advance of over 32%. This rapid ascent was fuelled by a convergence of AI-related catalysts that have turned SoftBank into a proxy for the artificial intelligence buildout.
Three engines powered the move. First, Nvidia reported record quarterly revenue of $81.6 billion, an 85% year-on-year increase, reinforcing the market’s conviction that AI infrastructure spending is still accelerating. That optimism spilled into SoftBank because of its deep ties through Arm Holdings, the chip-design giant. Arm stock surged more than 16% on Friday, lifting SoftBank’s net asset value. Second, OpenAI, the maker of ChatGPT, is reportedly preparing a confidential U.S. IPO filing in the coming weeks, working with Goldman Sachs and Morgan Stanley. SoftBank borrowed $60 billion to invest in OpenAI, making it one of the largest shareholders, and has already booked cumulative gains of $45 billion on that stake. Third, the upcoming IPO of SB Energy—a large-scale power and data center project backed by SoftBank, OpenAI, Oracle, and MGX—added another layer of excitement.
The Nikkei 225 was also boosted by data showing foreign investors bought ¥948 billion of Japanese stocks last month, taking advantage of a weak yen near 160 to the dollar. Adding to the positive sentiment, former U.S. President Donald Trump signaled a potential deal between the U.S. and Iran, which sparked a rally on Wall Street and a drop in crude oil prices.
Technical analysts pointed to a textbook cup-and-handle pattern on the Nikkei 225 daily chart, with a breakout and successful retest of the upper boundary. The index remains above all key moving averages, suggesting a possible move toward the year-to-date high of ¥63,805 and beyond.
Skeptics, however, urge caution. Despite SoftBank’s record annual profit of ¥5 trillion, driven by mark-to-market gains on OpenAI, credit analysts at CreditSights maintained an “outperform” recommendation on the company’s debt, noting its underlying asset value remains strong but the balance sheet is stretched. Bloomberg Intelligence analysts flagged that IPOs of OpenAI and SB Energy could narrow SoftBank’s high-20% discount to net asset value, but holding-company discounts rarely vanish entirely. Vey-Sern Ling of UBP warned that sum-of-the-parts valuations deserve a meaningful discount because parent shareholders rarely capture the full value of underlying assets, especially when leverage and private valuations are involved. TD Cowen’s Krish Sankar raised his SoftBank ADR price target from $13 to $20 but kept a Hold rating, underscoring that even bulls are not necessarily chasing the stock. The question remains whether this is a genuine re-rating or another AI sugar rush that will fade.
