Macquarie analysts have revised their price target for SoftBank (TYO:) Group, reflecting a more cautious approach to AI-exposed stocks amid recent market volatility.

Analysts have now set a price target of ¥10,000, down from ¥11,750, citing cooling market enthusiasm for AI-related stocks. The correction comes despite SoftBank’s robust financial position and solid asset portfolio.

According to the company, recent market dynamics have impacted the valuation of SoftBank’s key assets, particularly its stake in Arm.

Macquarie notes that Arm’s equity value increased significantly by 6.6 trillion yen, which helped SoftBank’s net asset value (NAV) rise to 35.3 trillion yen at the end of the June quarter.

However, the market volatility that followed, especially in AI-exposed names, is said to have led to a market valuation correction that saw the net asset value fall to ¥24.9 trillion as of August 6.

Analysts say SoftBank continues to maintain financial strength, with a loan-to-value ratio of 10.9% and liquidity of 4.3 trillion yen remaining stable despite challenging market conditions. The 500 billion yen repurchase authorization, announced with the results, further underscores the company’s solid balance sheet.

Macquarie’s valuation now includes an enterprise value of $119 billion for Arm, which is in line with current levels and reflects the broader sector’s response to waning enthusiasm for AI.

Despite the price target cut, Macquarie maintains its “Outperform” rating on SoftBank, noting that the company’s fundamentals remain robust and the potential for growth remains, especially given the stability of its telecoms assets and future changes in Arm’s valuation.

Overall, although Macquarie has revised expectations, the company remains sanguine about SoftBank’s long-term prospects.