As OpenAI nears an IPO, investors are getting into the deal ahead of time through Softbank (SFTBY).
Softbank shares gained 12% in the last five days and are up by 40.6% in 2026. Its majority ownership in chip firm Arm Holdings (ARM) is the primary catalyst for the gain. ARM stock added 16.2% on Thursday and 39% in just five days. The quick gains are not based on any fundamental change. For example, analysts at Jefferies issued a positive note on Nvidia’s (NVDA) quarterly results. On that basis, it viewed Arm’s guidance for AGI CPU revenues (of $15 billion) in 2031 as conservative.
ARM stock trades at a forward P/E of 118.45, based on a closing price of $298.23.
Bubble Risks Rise
The longer that valuations in chip stocks extend, the greater the risk of a correction. Bears will not have an easy time profiting from a sell-off event. The timing of an abrupt reversal in sentiment is impossible to predict. Even the Strait of Hormuz, causing an oil shock to the global economy, did not deter buyers to panic sell.
The Dow Jones closed at a record high on Thursday, while the Nasdaq (QQQ) is 104 bps away from the all-time high. Still, daily trading volume is sharply lower than in January – March. Investors who panic sold potentially missed the rally between April and May. They might still be wary of buying back a position after the Nasdaq gained 41.32% from its 52-week low.
