SoftBank Group jumped more than 5% in Tokyo on Friday, rising 5.3% in early trading and helping the Nikkei 225 climb 1.8% to 69,523.56. The rally followed softer-than-expected US producer-price data, which reduced the probability of a Federal Reserve rate increase in September to roughly 35%.
SoftBank has become a concentrated bet on AI. Its net asset value swung from about ¥40 trillion at the end of March to ¥72.3 trillion at the end of June, before correcting to roughly ¥58.3 trillion by August 5. The company reported June-quarter net profit of ¥347 billion, far above the ¥120 billion expected, helped by stakes in OpenAI and Intel. Reports that OpenAI's revenue run rate has reached $40 billion ahead of a possible IPO added to positive sentiment.
The Bank of Japan remains the key risk. The BOJ raised its policy rate to 1% in June, and markets now see a 76% probability of another hike in September, up from 24% on July 30. Former Japanese currency diplomat Mitsuhiro Furusawa told Reuters most market participants expect the BOJ to move next month. Citi analysts forecast the policy rate reaching 2% by the end of 2027, while Goldman Sachs warned that risks are skewed toward an earlier increase.
A stronger yen could reduce the yen-translated value of SoftBank's dollar-denominated AI holdings and encourage the unwinding of yen-funded carry trades. Deutsche Bank analyst Peter Milliken has cautioned that SoftBank investors are vulnerable to a reversal in elevated technology prices or the weak yen. Kioxia also rebounded, rising 50% from its monthly low to ¥53,830, after guiding for about $11.78 billion in operating profit. The Nikkei 225 has formed a bullish flag pattern, but a drop below 65,000 could invalidate that setup.
