UBS raises SoftBank Group target price, with focus on OpenAI and data center infrastructure

Overview

This is an UBS company research and earnings review report on SoftBank Group. The core focus is not a change in management guidance, since management did not provide formal guidance, but rather a re-assessment of SoftBank's value centered on the company's NAV, ARM valuation, OpenAI stake, the Stargate project, and AI data center infrastructure business. UBS viewed the earnings results somewhat positively and raised its NAV-based target price to ¥8,700.

Core views

UBS's core view is that SoftBank's near-term share price drivers are mainly ARM and OpenAI. ARM, as a listed company, is well disclosed, while disclosure around OpenAI is improving. If Stargate, the OpenAI stake, and subsequent AI semiconductor investments gradually become businesses with predictable earnings, then about 85%-90% of SoftBank's NAV could be composed of more modelable assets, which could both expand NAV and reduce the market discount. The report also says the current LTV remains below the financial discipline threshold, so balance sheet constraints are not yet a major negative factor.

Analysis framework

The report uses a NAV-driven holding company valuation framework, building the target price from the company's disclosed NAV, ARM target price, OpenAI stake percentage, the value of OpenAI's data center infrastructure business, and NAV discount assumptions. UBS also runs sensitivity analysis on the key value drivers under upside, base, and downside scenarios, and combines that with forecasts for future annual EPS, margins, ROIC, EV/EBITDA, and P/E to assess the earnings recovery path.

Methodology notes

• Valuation methodsNAV discount valuation

  A holding company's market capitalization can roughly be understood as NAV multiplied by the discount rate.

  The report starts with SoftBank's disclosed NAV and UBS model estimates, then uses assumptions on listed holdings, FX, asset complexity, and the discount rate to calculate the target market value and per-share value. The base case uses roughly ¥49.5 trillion in NAV and a 20% discount to derive a ¥8,700 target price.

• Scenario analysisUpside/base/downside scenarios

  Target price ranges are measured using different assumptions for ARM price, OpenAI data center value, NAV, and discount rate.

  The upside case assumes an OpenAI data center infrastructure enterprise value of $1,000bn, ARM theoretical value of $325, NAV of about ¥72.7 trillion, and no discount; the base case assumes enterprise value of $730bn, ARM at $260, NAV of about ¥49.5 trillion, and a 20% discount; the downside case assumes zero value for the OpenAI data center business, ARM at $150, NAV of about ¥29.4 trillion, and a 20% discount.

• Asset valuationARM PEG methodology

  PEG is used to normalize the P/E multiple for fast-growing ARM.

  UBS says ARM is growing faster than most peers, so it derives the target price using a PEG method and applies a 1.6x target PEG, representing a modest premium to semiconductor peers.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SoftBank Group (9984.T)

  The subject of the report, with valuation centered on NAV and the discount rate.

  Strengths

  Owns ARM, OpenAI-related interests, Vision Fund, and potential AI data center infrastructure assets; LTV is below the financial discipline threshold; NAV has risen notably recently.

  Weaknesses

  The asset structure is complex, and historically the large number of non-ARM assets with limited transparency has led to a sizable discount.

  Comparison

  Compared with the past NAV structure, which was mainly composed of ARM and a large number of non-ARM assets, future NAV interpretability may improve if AI-related businesses become more predictable.

  Risks

  NAV estimates are highly sensitive to ARM share price, OpenAI valuation, FX, discount rate, and capital expenditure assumptions.

• ARM

  An important component of SoftBank's NAV and one of the near-term share price drivers.

  Strengths

  It is a listed company with ample disclosure and is growing faster than most competitors; UBS incorporates an ARM target price of $260 into its SoftBank target-price model.

  Weaknesses

  The valuation is relatively high and sensitive to growth expectations and semiconductor market risk.

  Comparison

  UBS uses a PEG method and applies a modest premium versus semiconductor peers.

  Risks

  ARM's theoretical value ranges from $150 to $325 in the scenarios, which has a significant effect on SoftBank's NAV and target price.

• OpenAI stake

  One potential source of NAV growth for SoftBank.

  Strengths

  Disclosure around OpenAI is improving, Codex users are growing quickly, and future product announcements could improve investor sentiment.

  Weaknesses

  The stake percentage and common share conversion ratio are still uncertain, and valuation depends on progress toward PBC conversion.

  Comparison

  Official disclosure corresponds to a $260bn valuation for OpenAI, Inc., while media reports suggest valuations as high as $500bn, so the valuation basis differs materially.

  Risks

  Failure of the PBC conversion, a valuation reset, or an unfavorable conversion ratio would all reduce the NAV contribution.

• Stargate and OpenAI data center infrastructure

  One of the core value drivers of SoftBank's AI infrastructure investment theme.

  Strengths

  Oracle and OpenAI contract disclosures assume the first Stargate project has 4.5GW and $30bn in annual sales; UBS's base case estimates the related business value at about ¥1.3 trillion.

  Weaknesses

  Full operations may take 4 to 5 years, so the present value needs to be discounted; building 10GW of AI data centers could cost roughly $500bn in total.

  Comparison

  The upside case values the business at ¥6.3 trillion, the base case at ¥1.3 trillion, and the downside case at zero, highlighting the wide market disagreement and uncertainty.

  Risks

  Power supply, construction costs, financing, operating progress, customer demand, and the AI compute cycle could all affect returns.

• Vision Fund and other funds

  An important part of SoftBank's non-ARM NAV.

  Strengths

  As of the end of June 2025, the company disclosed that the total value of its funds and other funds was about ¥10 trillion, holding more than 300 stocks.

  Weaknesses

  The assets are numerous and diverse, historically making it difficult for investors to clearly understand NAV and contributing to a large discount.

  Comparison

  Compared with ARM and OpenAI-related assets, the funds have lower transparency and predictability.

  Risks

  Economic conditions, interest-rate trends, portfolio company valuations, and changes in exit markets will affect fund value.

Key data

• 12-month ratingBuyThe 12-month rating disclosed on the front page of the report.
• Target price¥8,700Raised from the prior ¥7,570, based on disclosed NAV and incorporating an ARM target price of $260.
• Reference share price¥5,770The chart shows the date as May 14, 2026.
• Base-case upside+51%The return implied by UBS's scenario chart for the ¥8,700 base-case target price.
• NAV as of end-March¥40.1 trillionCompany-reported NAV as of the end of March.
• NAV as of May 12¥47.7 trillionThe report says NAV improved further on May 12.
• Current NAV discount28%The NAV discount reflected in the current share price.
• Current LTVabout 15%Below the 25% financial discipline threshold; the report expects LTV of 17.0% by end-2026.
• OpenAI Codex usersfrom 1 million to 4 millionFrom February 4, 2026 to April 21, showing strong growth momentum.
• Ohio data center power facilities10GW planned, first phase 800MW, investment of $30bn-40bnManagement's explanation of the U.S. Department of Energy announcement; operations are expected to start in early 2028.
• NAV sensitivity to OpenAI stake6.73% corresponds to $16.2bn / about ¥2.3 trillion; 11.5% corresponds to about ¥4 trillionThe stake percentage depends on whether OpenAI can convert into a PBC and the common share conversion ratio.

Impact & implications

The investment implication of the report is that SoftBank's valuation focus is shifting from simply ARM holdings and a complex fund asset discount to a more modelable value set driven by AI infrastructure, OpenAI-related equity, and the semiconductor ecosystem. If disclosure around these assets continues to improve and the earnings path becomes clearer, the market may assign a higher NAV and a lower discount; conversely, OpenAI stake percentage, PBC conversion, data center capital expenditure, and ARM share price volatility will still have a material impact on the target price.

Risks

• A decline in ARM's share price or target price would directly reduce SoftBank's NAV.
• There is major uncertainty around OpenAI's stake percentage, PBC conversion, and common share conversion ratio.
• Stargate and AI data center construction require huge capital expenditures, full operations are far away, and execution and financing risks are high.
• SoftBank's asset structure is complex; if disclosure remains insufficient or investors still struggle to understand NAV, the discount may not narrow.
• FX, interest rates, the regulatory environment, intensifying competition, and volatility in fund portfolio valuations could all affect investment returns.
• Although LTV is below the threshold, a fall in NAV or additional investment could tighten financial discipline room.

What to watch

• Whether OpenAI successfully converts into a public benefit corporation and SoftBank's eventual common share ownership percentage.
• The impact of OpenAI Codex and subsequent product announcements such as Squad on investor sentiment and valuation.
• The construction progress, investment scale, and operating start timing of the Ohio 10GW power facility and the first 800MW project.
• GPU count, capital expenditure, revenue, and EBITDA visibility for the Stargate project.
• ARM share price performance and whether UBS needs to adjust its $260 ARM target-price assumption.
• Subsequent changes in SoftBank's disclosed NAV, LTV, and NAV discount.