Softbank Group's NAV discount is -45%, narrowing by 24.4 percentage points year to date

Overview

This report focuses on changes in the net asset value discount of Softbank Group (9984.T). It notes that the share price has risen 44.8% year to date, while NAV has increased 109.0%, resulting in a current NAV discount of approximately -45%. Morgan Stanley believes greater AI asset exposure supports a narrowing NAV discount and uses the latest NAV trend as a valuation reference.

Core views

The core view is that Softbank Group's NAV growth is significantly outpacing its share price, while the discount remains substantial; AI-related assets, particularly ARM, have made a significant contribution to NAV growth; and valuation assumes an NAV discount of approximately 40%. Although the target price still implies upside from the current price, the report maintains an Equal-weight rating, indicating a relatively neutral risk-adjusted return assessment versus the industry coverage universe.

Analysis framework

The report primarily uses an NAV framework to assess Softbank Group, comparing the share price with per-share or total NAV trends and incorporating NAV composition, AI asset exposure, ARM performance, the IPO environment, and the interest-rate environment to assess whether the discount may narrow further.

Methodology notes

• Valuation methodsNAV Discount Method

  Applying a discount to the net asset value of a holding or investment company to derive a target value.

  The report states that the target price references the latest NAV trend and applies an NAV discount of approximately 40%; the current market discount is approximately -45%.

• Rating SystemMorgan Stanley Relative Rating

  Equal-weight indicates that risk-adjusted total returns over the next 12-18 months are expected to be broadly in line with the average for the industry coverage universe.

  The report discloses an Equal-weight rating for Softbank Group and an In-Line industry view.

Asset mapping & comparison

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

• Softbank Group (9984.T)

  Research subject

  Strengths

  Strong NAV growth, increasing AI asset exposure, and outstanding performance of ARM-related assets.

  Weaknesses

  As a holding and investment platform, the company's share price still trades at a substantial discount to NAV.

  Comparison

  The report discloses that the share price has risen 44.8% year to date, significantly below NAV's 109.0% year-to-date increase.

  Risks

  Deterioration in the IPO environment, a prolonged bear market, declining growth-company valuations, and an unfavorable interest-rate environment.

• ARM

  A significant component of Softbank Group's NAV and a representative AI asset exposure

  Strengths

  The report discloses that ARM-related assets have risen 235% year to date, making them a major driver of NAV expansion.

  Weaknesses

  High sensitivity to the valuation of a single high-growth AI-related asset.

  Comparison

  ARM-related assets have significantly outperformed the 19% increase in other assets disclosed in the report.

  Risks

  A correction in AI valuations or a decline in risk appetite for growth stocks could weaken NAV support.

Key data

• NAV Discount-45%Narrowing by 24.4 percentage points from the start of the year.
• Share PriceApproximately ¥6.4KUp 44.8% year to date; the table lists a closing price of ¥6,370 on 2026-07-10.
• NAVApproximately ¥11.6KUp 109.0% year to date.
• ARM-Related Performance+235%The report discloses ARM as a major contributor to the year-to-date change in total NAV.
• Other Asset Performance+19%The report discloses that other assets rose 19% year to date.
• Target Price¥8,000The report table lists Morgan Stanley's target price.
• Market Capitalization¥36,630.0bnThe table lists the current base market capitalization.
• Average Daily Trading Value¥449.9bnThe table lists the average daily trading value.

Impact & implications

If AI asset exposure continues to increase, ARM's valuation remains strong, and the IPO market improves, Softbank Group's NAV discount may narrow further, supporting realization of the target price. Conversely, if the bear market persists, IPO activity declines, or appetite for growth-stock investments weakens, the NAV discount may remain elevated or widen again.

Risks

• A prolonged bear market could reduce IPO activity and make investment decisions more cautious.
• Declining equity values of growth companies could weigh on NAV.
• If interest rates do not decline or risk appetite retreats, the thesis of a narrowing NAV discount could be impeded.
• Morgan Stanley discloses investment-banking and other service relationships with Softbank Group; investors should be aware of potential conflicts of interest.

What to watch

• Subsequent changes in Softbank Group's NAV and whether the NAV discount continues to narrow.
• Changes in ARM's share price and the valuations of AI-related assets.
• Whether the global IPO market recovers strongly.
• The impact of interest-rate changes on growth stocks and private-company valuations.
• Whether Morgan Stanley subsequently adjusts its Equal-weight rating or ¥8,000 target price.