SoftBank Plunges as AI Sell-Off Rattles Global Chip Markets

SoftBank Group shares plummeted approximately 9% on Friday, echoing a significant downturn across Japanese chip stocks as a widespread AI sell-off continued to ripple through global markets. This steep decline followed renewed jitters on Wall Street concerning the soaring valuations of artificial intelligence-linked companies and the long-term profitability of massive AI infrastructure investments. The broader market reaction saw Japan's Nikkei 225 index plunge into correction territory, dropping over 4% on the day. This market pullback hit despite Taiwan Semiconductor Manufacturing Company (TSMC), a key global player, reporting strong second-quarter earnings and increasing its 2026 revenue and capital expenditure forecasts due to robust AI demand. However, investors appeared more focused on the implications of TSMC ambitious spending plans on potential profit margins, causing its own US-listed shares to dip. Major US chipmakers like Nvidia, Micron Technology, and Intel also saw significant declines, dragging down the Philadelphia Semiconductor Index and the Nasdaq Composite. While some analysts view this as a necessary, albeit sharp, unwinding of 'crowded AI trades' and a re-evaluation of inflated stock prices, the underlying demand for AI-related components, especially High-Bandwidth Memory, is still reported to be strong. The coming weeks will reveal if market confidence can be quickly restored in the long-term profitability of the AI megatrend or if this marks a more sustained period of investor caution regarding tech sector valuations.