SoftBank’s CEO, Masayoshi Son, has been fixated on artificial intelligence (AI) for the past five years, spending over $140 billion on start-ups in this field. However, Son’s record in AI investing has been underwhelming. Despite missing out on the recent surge in AI-driven corporate valuations, Son plans to double down on his AI bets. One option being considered is investing in OpenAI, a move that could cost tens of billions of dollars.
OpenAI is already highly valued, having closed a $300 million share sale at a valuation of up to $29 billion in April. SoftBank had the chance to benefit from the AI revolution through Nvidia, a company critical to generative AI technology. However, SoftBank sold its entire stake in Nvidia in 2019, missing out on Nvidia’s subsequent share price increase of over 1,000%.
Although SoftBank recently saw success with the listing of UK chip designer Arm, whose shares trade at 155 times forward earnings, Son’s key portfolio returns have primarily come from consumer internet companies rather than AI. SoftBank’s funds suffered losses in nearly three-quarters of its portfolio companies in the latest quarter.
Instead of investing in OpenAI, Son could turn his attention to the fast-growing consumer sector in Southeast Asia, where valuations are much lower. This would allow him to stick to his area of expertise and potentially achieve better returns.
In conclusion, while SoftBank’s CEO, Masayoshi Son, believes AI is a crucial investing theme, his track record in this field has been lackluster. Investing in OpenAI, despite its high valuation, may not be the best move for SoftBank. Son should consider focusing on his consumer sector investments and explore opportunities in Southeast Asia.
What are your thoughts on SoftBank’s AI strategy? Do you believe investing in OpenAI is the right move for the company? Leave a comment and let us know!
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