SoftBank Group (SFTBY.US)'s rising weight in Japan's stock market benchmark index is forcing even skeptical investors to buy the stock.

SoftBank founder Masayoshi Son's bets on artificial intelligence have driven the stock price up 146% since the beginning of the fiscal year in April, making it one of the best-performing stocks in the Topix index. During the same period, SoftBank's weight in the index has doubled to 2%, second only to blue-chip stocks like Toyota Motor and Sony Group.

Yoshiki Nagata, Chief Investment Officer at enTorch Capital Partners, said that despite concerns about SoftBank's volatility and complex business model, fund managers must hold the stock if they want to outperform the market. "Many institutional investors are now struggling with how to deal with SoftBank. If you don't hold this particular stock, all the effort put into selecting other quality investments will be in vain," said Yoshiki Nagata.

Data shows that since the end of March, SoftBank's market capitalization has increased by ¥15.9 trillion (approximately $110 billion), contributing nearly 10% to the Topix's market cap growth. The second-ranked contributors to the benchmark index's market cap growth—Advantest and Mitsubishi Heavy Industries—provided less than half of SoftBank's increase.

Hiroaki Tomori, Executive Fund Manager at Mitsubishi UFJ Asset Management, said investors need to realize that SoftBank's stake in OpenAI will increasingly impact its valuation. OpenAI's massive spending plans are already driving up U.S. tech stocks like Broadcom (AVGO.US) and Oracle (ORCL.US). "OpenAI's growth is astonishing, and AI applications are becoming ubiquitous. We should see confidence reflected in OpenAI's large orders," he said.

However, it is worth noting that SoftBank's stock tends to perform well when the market rises but is vulnerable during downturns. Its beta coefficient (measuring volatility relative to the overall market) is the highest among Japan's top 100 companies, at 1.515, meaning its fluctuations are 1.5 times those of the index.

Data shows that SoftBank's stock is currently trading at a discount of about 20% to its net asset value—the narrowest gap in recent years. This has sparked market speculation that the stock's rally may stall if investments weaken.

However, Masayoshi Son's latest round of big spending—including an additional $30 billion for the Stargate AI project in collaboration with OpenAI and a surprising $2 billion bet on Intel (INTC.US)—is bringing new optimism.

Nomura Securities analyst Daisaku Masuno predicts that this discount will disappear because improved investments by the SoftBank Vision Fund reduce risk, and its AI chip plans are more likely to progress. He raised SoftBank's target stock price twice in less than a month, expecting its NAV (net asset value) discount to shrink to 0%.

Meanwhile, Yoshiki Nagata, Chief Investment Officer at enTorch Capital Partners, said that as some investors continue to adjust their underweight positions back to benchmark levels, SoftBank's stock price gains could accelerate. "When a stock with high weight like SoftBank keeps rising, it becomes difficult to close your underweight position. This is a structural issue with benchmark-linked investing. We may see a self-reinforcing cycle—additional buying triggers more buying," he said.