Nvidia stock is undervalued because AI companies need to spend another $9 trillion to achieve superintelligence, Softbank CEO says
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- The CEO of Softbank says Nvidia stock is undervalued despite its huge valuation.
- Maysoshi Son predicts AI spending will boost Nvidia's chip business significantly over the next decade.
- Son envisions artificial superintelligence by 2035, requiring $9 trillion in spending.
Even after Nvidia's ascent to the second-largest company in the world, Softbank CEO Masayoshi Son says he thinks the stock is still "undervalued."
Son said in an interview on Monday that the ongoing spending trends in artificial intelligence will only accelerate in the years ahead, benefiting Nvidia and its GPU chip business, which has been the driving force behind most AI advancements.
"I think Nvidia is undervalued because the future is much bigger," Son said at the Future Investment Initiative conference.
Son's bullish view on AI stems from his belief that artificial "superintelligence" will be achieved by 2035.
Whereas artificial general intelligence is broadly viewed as an AI system that is as smart as a human, Son defined artificial superintelligence as an AI system that is 10,000 times more powerful than the human brain.
Son said that to achieve that level of AI, it will require upwards of 200 million GPU chips and $9 trillion in total capex spending by companies.
According to Son, that could be a bargain when considering the immense profits that could be generated from a potential artificial superintelligence.
"I say it's still very reasonable capex. $9 trillion is not too big, maybe too small," Son said.
The famed investor calculated that if artificial superintelligence replaces just 5% of GDP in 10 years, it has the potential to deliver as much as $4 trillion in profits annually.
Softbank has sharpened its focus on investing in AI companies, recently contributing $500 million to OpenAI's funding round.
The Japan-based investment company also owns about 90% of Arm Holdings, which is planning to launch its own AI chips next year.
Son's bullishness on AI and Nvidia means he also has some regrets. Softbank previously owned a 4.9% stake in Nvidia, but sold it in 2019 for about $4 billion. That stake would be worth more than $160 billion today.
"I had to tearfully sell the shares," Son said earlier this year, calling Nvidia "the fish that got away."