Masayoshi Son’s Strategic Moves: Spotlight on AI and Growth Stocks

Looking for a savvy growth stock investor? Masayoshi Son, the CEO and largest shareholder of Softbank (OTC: SFTBF), stands out as a prominent figure. Based in Japan, Softbank is a vast diversified holding company with numerous high-profile investments.

Son has made headlines with his investments in Alibaba, Yahoo, Uber, DoorDash, WeWork, and Arm Holdings (NASDAQ: ARM), in which Softbank holds about a 90% stake.

A Look at the Lucrative Investment in Arm Holdings

Softbank’s stake in Arm, a chip design company that went public last year, has proven to be a standout investment. In 2016, Softbank purchased the company for $32 billion, a figure that has ballooned to around $130 billion today. The stock’s price has surged since its IPO last September, driven by strong demand from the AI sector and the smartphone market.

Although Son once held a 5% stake in Nvidia (NASDAQ: NVDA) before selling it in 2019, he now sees renewed opportunities in the AI landscape. Softbank recently invested $500 million in OpenAI, the creator behind ChatGPT, during a funding round that valued the startup at $150 billion.

Son made some intriguing predictions about the future of AI at a recent conference.

Image source: Getty Images.

Evaluating Nvidia’s Value

While attending the Future Investment Initiative, Son stated, “I think Nvidia is undervalued.” He explained that some bearish predictions estimate artificial general intelligence (AGI) could displace only 5% of GDP over the next decade, which amounts to about $9 trillion, based on anticipated GDP growth.

According to Son, this would require $9 trillion for investments in chips and data centers, with AGI capable of generating matching annual revenue at a 50% profit margin, translating to $4.5 trillion in profit. Achieving this scale would need 200 million chips and an electrical demand of 400 gigawatts—more than what the U.S. consumes today.

Such forecasts may seem ambitious, yet many technological revolutions often appear unrealistic before they materialize.

Learning from Masayoshi Son’s Investment Journey

Son’s reputation includes both triumphs and failures. His substantial investment in WeWork resulted in an $11.5 billion loss after the coworking company faced significant challenges. During the dot-com bubble, Son reportedly lost $77 billion in paper value, the largest loss ever recorded at that time.

However, his successes far outweigh his setbacks. For instance, Softbank’s investment in Arm has increased by approximately $100 billion since 2015, while an initial $20 million stake in Alibaba generated $72 billion in returns.

Investing in growth stocks, particularly those linked to emerging technologies, carries its own risks and rewards. While it is possible to lose your entire investment, successful stocks can yield extraordinary gains. One triumph can often outweigh multiple failures.

Although Nvidia may no longer undergo a tenfold increase in value in the short term, Son’s insights on AI stocks are noteworthy. He also discussed the potential of artificial superintelligence, which could be 10,000 times smarter than humans, immensely surpassing AGI in power.

Son remains optimistic about Arm, highlighting its dominant presence in the smartphone and Internet of Things markets, predicting its swift transition to an AI-centric business model.

If Son’s predictions regarding artificial general intelligence prove accurate and the market nears his $9 trillion estimate, significant profits could await both Arm and Nvidia investors.

Seize Your Chance at Profitable Investments

Do you worry you might have missed out on investing in top-performing stocks? Here’s an opportunity you won’t want to overlook.

On rare occasions, our analysts recommend a “Double Down” stock—companies poised for significant growth. If you’re concerned about missing your chance, now is the ideal time to secure your investments:

• Amazon: a $1,000 investment in 2010 would be worth $23,818!*
• Apple: a $1,000 investment in 2008 would reach $43,221!*
• Netflix: a $1,000 investment in 2004 would have grown to $451,527!*

Currently, we’re issuing “Double Down” alerts for three outstanding companies, with limited time for participation.

Discover 3 “Double Down” stocks »

*Stock Advisor returns as of November 11, 2024

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash, Nvidia, and Uber Technologies. The Motley Fool recommends Alibaba Group. For more details, see the Motley Fool’s disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.