Confirming SoftBank Group’s (TSE:9984) new AI trading and post-launch valuation of Infrinia AI Cloud OS

SoftBank Group (TSE:9984) is back in the spotlight following a series of AI moves, including a stake hike in OpenAI, new AI and energy funding rounds, and the launch of Infrinia AI Cloud OS.

Check out our latest analysis for SoftBank Group.

These AI-driven moves coincided with sharp swings in SoftBank Group’s stock price, including an 11.61% intraday increase on January 23 related to AI trading activity. At the same time, the 90-day stock price return shows a decline of 28.41%, which contrasts with the very high 3-year total shareholder return of 180.74%. This combination, along with recent volatility, suggests long-term momentum as investors reassess growth potential and risk.

If AI is gaining attention following SoftBank’s recent moves, then it might be a good time to take a look at other high-growth technology and AI stocks that might fit your watchlist.

SoftBank Group is trading at 4,274 yen, a discount to analysts’ average price target, so the key question is whether AI’s recent wins suggest there’s still room for upside, or whether the market is already pricing in future growth.

Most popular story: 20.3% are underrated

SoftBank Group closed at 4,274 yen, compared with a widely followed fair value estimate of 5,360 yen, and the dominant narrative paints the recent AI push as only part of a larger earnings and valuation story.

Analysts have a consensus price target of 14,420.176 yen for SoftBank Group, based on their expectations of SoftBank Group’s future revenue growth, profit margins, and other risk factors. However, there is some disagreement among analysts, with the most bullish reporting a price target of 20000.0 yen and the most bearish reporting a price target of just 9400.0 yen.

Read the whole story.

Want to know what’s behind this far-reaching result? This story hinges on expanding revenues, compressing profit margins, and increasing future earnings multiples. The exact combination may surprise you.

Result: Fair value ¥5,360 (undervalued)

Read the full explanation to understand what’s behind the predictions.

However, high portfolio valuations, leverage, and increased tech regulation can still put pressure on exits, gains, and the multiples used by analysts.

Learn about the key risks to this SoftBank Group story.

Another way to look at it: an even tougher cash flow picture

Although the fair value estimate of ¥5,360 suggests SoftBank Group is undervalued by 20.3% based on earnings assumptions, our DCF model points in a different direction. At 4,274 yen, the stock is trading well above the estimated future cash flow of 342.01 yen, suggesting a very large premium to these cash flow assumptions.

This gap raises a simple question for you. Is the current revenue-based model too generous, or is DCF’s view too harsh on how much cash SoftBank can realistically extract from its AI and investment bets over the long term?

Find out how the SWS DCF model arrives at fair value.

Simply Wall St runs Discounted Cash Flow (DCF) every day on every stock in the world (check out SoftBank Group, for example). The entire calculation is fully illustrated. Track your results with a watchlist or portfolio and get alerts when they change, or use our stock screener to discover 862 stocks that are undervalued based on cash flow. When you save your screener, you’ll also get alerts when new companies match, so you never miss out on potential opportunities.

Build your own SoftBank Group story

If you want to see the numbers differently, or want to highlight and test your assumptions yourself, you can start with Do it Your Way and create your own view in minutes.

A great starting point for SoftBank Group Research is our analysis which highlights 4 key benefits and 4 important warning signs that could influence your investment decision.

Ready to consider investment ideas outside of SoftBank Group?

If you’re serious about strengthening your watchlist, don’t limit yourself to just one stock. Use these ideas to expand the opportunities you set up before the market makes its first move.

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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