All-in-AI does not guarantee an A

July 05, 2023 14:06
Softbank GroupChief Executive Masayoshi Son (Photo: Reuters)

He gets hold of the deer but not its horn, as the Chinese would say.

Think of Masayoshi Son, one of the world’s most prolific technology investor who built up a substantial trunk in Alibaba Group when it was not famous.

But he seemed to run out of his luck in artificial intelligence (AI), the hottest investment theme in Silicon Valley in the past year.

The Softbank founder pledged to adopt an “All-in AI” investment approach as early as the summer in 2018, sadly with just a mediocre report card so far.

Son’s Vision Fund has reportedly invested in more than 400 AI-related companies but guess what, he only had stake in one out of the 26 AI unicorns – with a valuation of US$1 billion.

What a miss! Three weeks ago, Son told his shareholders that “I’ve made many, many mistakes in my AI investments, some of them embarrassing.

“But among the many failures, there are a number of buds that will blossom very soon.”

Son’s direction was right and he has fired many shots but perfectly missed most of the best companies. What a miss!

One big miss was definitely Nvidia. The Vision Fund sold its entire stake in the chipmaker in early 2019. Nvidia went up over 10 times after and joined the trillion-dollar club in May.

Still, Softbank owns three per cent of Bytedance, which topped all private companies with a US$225 billion valuation. The minority stake helped boost Softbank’s profit in 2021.

Most of Softbank’s AI investments have yet to blossom. One example was Cybereason, an endpoint security company, which raised $100 million that valued the company at US$350 million, a 90 per cent discount from its prior funding round in July 2021.

Why a man like Son who sees the future trend but fails to capitalise on it? Well, AI covers the ability to learn, reason, generalize and infer with over 10 areas in aspects such as logical thinking, sensory recognition, automation, anthropomorphism, language analysis, neural networks, data processing and machine learning.

The talk of the universe centres on ChatGPT, a computerized large language model, which is only one small aspect of AI.

And in AI, as in other sectors such as bio-technology, there are far more lemons than oranges. Winner takes all, as always. But investors like Son only need to find one big horn. He still has time.

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EJ Insight writer