If you’re looking for a growth stock investor to follow, it’s hard to find anyone more productive than Masayoshi Son, the CEO and largest shareholder of Softbank (OTC: SFTBF), a vastly diversified holding company based in Japan.
Son’s best-known investments include: Alibaba.comYahoo, Uber, DoorDashWeWork, and Arm positions (NASDAQ:ARM)in which Softbank owns an approximately 90% stake.
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That investment in Arm, a chip design company that went public last year, has been one of Softbank’s best investments in its history. Softbank took the company private in 2016 for $32 billion, and today that stake is worth about $130 billion. The stock has soared since its IPO last September thanks to strong growth in AI-related demand and in the smartphone market.
Son, who had also invested in it Nvidia (NASDAQ: NVDA) but unfortunately sold his 5% stake in chip stocks in 2019, he now sees more opportunities in the AI sector. Softbank was one of several investors who participated in OpenAI’s latest funding round, investing $500 million in the ChatGPT maker as part of a round that values the startup at $150 billion.
Son also made a bold statement about the future of AI at a recent conference.
Speaking at the Future Investment Initiative, Son said: “I think Nvidia is undervalued.” He further explained that bearish estimates predict that artificial general intelligence (AGI) will replace only 5% of GDP in ten years, which is equivalent to $9 trillion based on GDP growth expectations.
In his view, this means there will be $9 trillion in capital expenditures for those chips and data centers and the AGI running on that infrastructure could generate $9 trillion in revenue per year at a 50% net profit margin. meaning it would generate $4.5 trillion in profits.
Son also said it will require 200 million chips and 400 gigawatts, which is more than what the US currently uses in electricity.
That may seem far-fetched, but most technological revolutions seem that way in advance.
The head of Softbank is as known for his failures as his successes. He was a major investor in WeWork before the global coworking business exploded, and he lost $11.5 billion on that investment. At one point during the dot-com bust, he also lost $77 billion in paper wealth, more money at the time than anyone had lost in history.
But Son has earned much more with his successes. For example, Arm has gained about $100 billion from Softbank’s 2015 investment, and he made $72 billion on Alibaba, starting with an investment of just $20 million.
Growth stocks, especially those in emerging technologies, offer high risk and high reward. However, one winner can erase many losers, and one big winner can make you rich. After all, you can only lose 100% of your investment in a stock, but in rare cases and with enough time you can make 1,000%, 10,000% or even more. There is no limit to winnings.
While Nvidia is too big to be a 10-bagger right now, at least not without a very long time frame, it’s worth following Son’s advice on AI stocks as he also talked about the potential of artificial superintelligence, which would be 10,000 times smarter. than a human, many times more powerful than AGI.
Son also continues to believe that Arm is a great investment given its dominant market share in smartphones and Internet of Things devices, and said it would become an AI-focused company very soon.
If Son is right about artificial general intelligence, and the market even comes close to the $9 trillion figure he mentioned, Arm and Nvidia will both be big winners, and there will be plenty of others.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends DoorDash, Nvidia, and Uber Technologies. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
Billionaire investor Masayoshi Son is already $130 billion deep in AI stocks. Now he thinks Nvidia is undervalued. was originally published by The Motley Fool
