SoftBank Group was downgraded on Thursday to “Underperform” by Jefferies, which warned that the Japanese technology investor’s rapidly expanding financial commitments to OpenAI are raising concerns about valuation integrity.
The brokerage warned of growing structural risks tied to SoftBank’s concentrated investment exposure and its accelerating funding of the AI company.
Jefferies said SoftBank’s heavy capital support for OpenAI could create valuation distortions similar to past high-profile startup funding cycles. Analysts noted that SoftBank has provided roughly 85% of the cash raised by OpenAI in recent funding rounds, which they said helped drive successive valuation increases (from $150 billion to as high as $840 billion) while boosting SoftBank’s reported net asset value.
The analysts also pointed to related-party transactions that they said complicate the financial picture. SoftBank pays OpenAI about $3 billion annually for rights tied to Japan, equivalent to roughly 15% of the company’s reported December revenue, while a separate $200 million payment from SoftBank to chip designer Arm Holdings accounts for around 16% of Arm’s quarterly revenue.
Jefferies said some previously reported external funding commitments for OpenAI appear uncertain. The firm highlighted reports of $100 billion from Middle Eastern investors and a $30 billion contribution from Microsoft that have yet to fully materialize. Investments from companies such as Amazon and Nvidia are structured largely as cloud or computing credits rather than direct equity funding.
Beyond funding structure concerns, Jefferies said OpenAI’s competitive position in the generative AI market is becoming more challenging.
Benchmark tests show OpenAI’s ChatGPT increasingly matching competing models such as Gemini from Google, Claude from Anthropic and Grok from xAI, the analysts noted. In enterprise software, Jefferies cited Anthropic as emerging as a leader with about $19 billion in annual recurring revenue in early 2026.
Meanwhile, Microsoft recently launched its “Copilot CoWork” product in partnership with Anthropic rather than OpenAI, according to the analysts.
Jefferies said competition is also intensifying in consumer AI, where Google benefits from broad distribution across billions of Android and iOS devices, proprietary computing infrastructure such as its tensor processing units, and large data resources.
The analysts also flagged deteriorating economics at OpenAI. According to filings from Microsoft, OpenAI posted a loss of about $12 billion in the third quarter of 2025, implying an annualized cash burn exceeding $50 billion. The company has also begun introducing advertising in 2026, which Jefferies said marks a shift from earlier statements by OpenAI executives that ads would only be used as a last resort.
Credit risk is also rising, Jefferies said. In March 2026, S&P Global Ratings revised SoftBank’s outlook to negative from stable, citing the group’s additional $30 billion commitment to OpenAI and the potential strain on financial flexibility.
The brokerage said its view could change if the Japanese government were to provide a financial backstop for SoftBank, if OpenAI lists publicly at a valuation above recent private funding rounds, or if the AI developer secures significant cash funding from investors other than SoftBank.