SoftBank's stock price surged 135% before a sudden halt? Analysts warn: short-term overheating, TSMC and Hon Hai are also affected
SoftBank's stock price has surged 135% in four months, raising market concerns about short-term overheating. Technical indicators show overbought conditions, and analysts warn of a potential pullback. Despite short-term caution, some fund managers remain optimistic about SoftBank's long-term potential. SoftBank plans to acquire Intel shares for $2 billion, but market reactions have been mixed, leading to a decline in SoftBank's stock price. Meanwhile, global semiconductor stocks have plummeted due to the impact of U.S. government plans, with companies like TSMC also affected
Investment Insight - SoftBank's stock price has recently skyrocketed, soaring over 135% in just four months, directly entering the overbought zone!
Japanese tech investment giant SoftBank has recently become the market focus, with its stock price soaring over 135% in just four months, raising concerns among investors about whether it has become overheated. Just this month, SoftBank's market value surged by over 7 trillion yen (approximately 47 billion USD).
However, technical indicators have raised warning signs. On Monday, SoftBank's 14-day Relative Strength Index (RSI) briefly soared to 90, reaching the overbought zone. Notably, this indicator reached similar levels in February and July 2024, and each time was followed by significant corrections.
SoftBank's stock price is currently far above the market consensus target price, reaching its highest level since 2010, which often signals an impending pullback. Even fund managers who recently bought SoftBank shares have expressed caution. Angus Lee from Sparx Asset Management stated that SoftBank's stock price "appears overheated in the short term" and admitted to taking profits recently. However, he still believes SoftBank has long-term appeal, mainly due to potential IPOs of companies in its portfolio.
Kazuhiro Sasaki, head of research at Japan's Phillips Securities, pointed out another key factor: "This surge is not solely based on fundamentals." He explained that part of the demand comes from investors increasing their investments in the Nikkei 225 index, which just hit a historical high this week. Although SoftBank's stock price discount relative to its net asset value has narrowed from 48% at the end of July to about 30%, its attractiveness from a valuation perspective is no longer what it used to be.
Recently, SoftBank announced plans to acquire Intel shares for $2 billion, with market attitudes towards the two companies being starkly different. This news pushed Intel's stock price up by 7%, while SoftBank's own stock price fell by 7% on Wednesday.
At the same time, news of the U.S. government's plan to implement "subsidy-for-equity" deals with several global semiconductor companies has directly shocked global chip stocks. On Tuesday, the Philadelphia Semiconductor Index plummeted by 1.81%, and the Nasdaq Index also fell by 1.46%, with Nvidia dropping 3.5%, marking its largest decline in four months. The Taiwan stock market plunged by 700 points on Wednesday, with TSMC down 4.22% and Hon Hai down 3.61%, leaving the market in despair.
The decline of these AI and chip companies has raised concerns among some analysts. However, Jayson Bronchetti, Chief Investment Officer at Lincoln Financial Group, insists: "AI-related trades may not be over but are just taking a breather." The tech stock surge driven by the AI boom seems to be entering a phase of reassessment
