SoftBank shares rise again as Arm’s explosive AI rally

(Bloomberg) — SoftBank Group Corp. shares rose for a third day on the back of Arm Holdings Plc’s explosive rally, with the chip designer’s value nearly doubling since making the case last week for how it would benefit from artificial intelligence. Bounce.

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SoftBank stock rose as much as 11% on Tuesday, its highest level since May 2021. SoftBank owned about a 90% stake in Arm since it took the company public last year.

Arm shares rose 29% on Monday, taking its gains since reporting financial results on February 7 to more than 90%. The company is expanding beyond its traditional base in smartphone technology into new markets such as artificial intelligence applications, broadening its outlook.

“There is no doubt that Arm is a high-growth stock and deserves a premium valuation,” Victor Galliano, an independent analyst, wrote in a note published on SmartKarma. “It has become even more complex as it becomes an AI play, increasing its credibility among growth investors.”

SoftBank founder Masayoshi Son has promised to explore ways to use Arm’s chip designs while pursuing AI-related investments. The Tokyo-based company also reported financial results last week, reporting its first profit after four quarters of losses.

SoftBank is trying to recover from a series of bad startup bets, and Son can now point to Arm as an example of how its risk-taking has paid off. Arm is becoming the crown jewel among its holdings, just as Chinese e-commerce leader Alibaba Group Holding Ltd. did in the past.

“Our main concern is that this now appears to be a ‘growth at any cost’ stock, and it could be derailed by earnings disappointment,” Galliano wrote in the note. SoftBank’s increasing reliance on Arm is a risk because “we believe it…

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