Did Masayoshi Son signal the bursting of the AI bubble by selling all his NVIDIA shares after reclaiming the title of Japan's richest man?
Masayoshi Son Is Set to “Miss Out on” NVIDIA Again
A year ago, when Masayoshi Son of SoftBank and Jensen Huang of NVIDIA embraced and shed tears, regretting having sold NVIDIA shares too early, most people believed that NVIDIA's value was unparalleled. If given a second chance, Son would probably lament not buying enough and holding the shares for too short a period.
However, Masayoshi Son always manages to surprise. He has once again liquidated his entire stake in NVIDIA. SoftBank Group announced that it had cleared all its NVIDIA holdings, cashing out approximately $5.8 billion (equivalent to around 41.5 billion yuan). Subsequently, NVIDIA's stock price dropped in the evening, and its market value evaporated by tens of billions of dollars overnight. What a "masterstroke"! Is there any investment more worthwhile than NVIDIA?
Source: Xueqiu
Surprisingly, there is. It's OpenAI, the core enterprise of this AI revolution. Without it, the story of NVIDIA wouldn't exist. But is it too early to bet on OpenAI's explosion in the application end? We'll analyze this later.
There are certain similarities between Son's two times of liquidating NVIDIA shares. In Son's dictionary, there is no concept of diversified hedging investment. Instead, he focuses on heavily investing in leading concepts, going all - in or going home.
Previously, there was the failed case of WeWork. In 2020, it was valued at $70 billion. After the failure of its IPO, the bubble burst, resulting in an annual loss of tens of billions. Later, the valuation of the unlisted technology companies in which SoftBank had heavy investments plummeted in 2022, with an annual loss of up to $32 billion, setting a historical record. Additionally, investments in the South Korean e - commerce platform Coupang and "the Amazon of the food industry" Zume also incurred significant losses.
However, since the first half of this year, by betting on NVIDIA, acquiring Arm and ABB's robotics business, and building an AI full - industry chain layout, Masayoshi Son, the investor who was "ridiculed by the whole network", has regained the title of the richest man in Japan. For a while, he became the most inspiring and powerful investor on the Internet.
Source: Internet
But Masayoshi Son will only slap the faces of those who praise him. Recently, SoftBank sold its NVIDIA shares, cashing out approximately $5.83 billion, and sold its T - Mobile shares, cashing out about $9.2 billion. It also mortgaged its Arm shares, using its stake in the chip - design company as collateral to increase its guaranteed loan limit to $20 billion.
As is well - known, SoftBank liquidated all its NVIDIA holdings for $3.6 billion in 2019 and then repurchased them in 2020 until the latest sell - off. The previous sell - off has become a cautionary tale in the investment circle: if SoftBank Group had retained those original shares, their value would now exceed $150 billion.
Many people focus only on Son not holding onto NVIDIA shares. However, the more important reason behind this is that at that time, SoftBank's focus was on autonomous driving and AI investments. In 2019, Masayoshi Son clearly did not consider NVIDIA as the core stock in AI. It was common for him to abandon a mature layout for other more promising investments.
Although later in 2020, he planned and facilitated the merger of ARM and NVIDIA, with a transaction price of $40 billion. Unfortunately, this attempt was not approved by the regulators, and Masayoshi Son missed out on NVIDIA once again.
Source: Internet
It's not hard to see that Masayoshi Son's investments are more from a financial perspective, often starting from the potential performance and market space rather than the value - investment perspective. This was the case last time, and it's the same this time. With a valuation of only $500 billion, OpenAI is obviously undervalued, so he should shift his focus and heavily invest in OpenAI. Due to Son's investment style, he often either invests in the wrong company or invests too early or too late. So, which case does the heavy investment in OpenAI fall into?
Masayoshi Son Bets All on OpenAI's IPO
Overall, OpenAI currently seems to be in its early stage rather than a stage where application revenue can explode.
"Some people say I have DeepSeek anxiety and spend too much on AI," Masayoshi Son has publicly stated more than once. "In the next decade, AI will affect at least 5% to 10% of the global GDP. If the return is in the range of $9 trillion to $18 trillion per year, why save money? The competition is getting fiercer. We must rush to the front, be brave, and go all - in."
When asked about the timing of selling NVIDIA shares during the earnings conference call, Yoshimitsu Goto, the Chief Financial Officer (CFO) of SoftBank Group, said that the company needed liquidity to fulfill its investment commitment to OpenAI. He stated, "This year, our investment in OpenAI is huge, exceeding $30 billion. Therefore, we have to liquidate some of our existing assets."
Source: Internet
Is it really as simple as just changing the heavy - holding stock? Could it be that Son is bearish on NVIDIA's future valuation and worried that the AI bubble will burst more severely at the top? Currently, it seems more like a signal of "early escape".
Coincidentally, Bridgewater Associates, the largest hedge fund on Wall Street, released its portfolio report as of the end of the third quarter of this year on Friday. The report shows that Bridgewater significantly reduced its stake in chip giant NVIDIA by nearly two - thirds in the third quarter. It also cut more than half of its Alphabet shares, about 9.6% of its Amazon shares, and over 35% of its Microsoft shares. In a report to investors, Karen Karniol - Tambour, the Chief Investment Officer of Bridgewater, and others warned that the current market stability is facing increasing risks.
When asked whether the liquidation of NVIDIA shares was related to valuation judgment, Yoshimitsu Goto declined to comment, only stating that adjusting the asset allocation is the fate of an investment company.
Of course, Masayoshi Son won't say he's bearish on NVIDIA, but the onlookers have already sensed something amiss.
Last week, SoftBank also announced a 1 - for - 4 stock split plan, which will take effect on January 1, 2026. Looking back at history, since the 21st century, every stock split by SoftBank has been accompanied by significant global market turmoil.
In June 2000, a 1 - for - 3 stock split: the dot - com bubble burst.
In January 2006, a 1 - for - 3 stock split: the U.S. housing bubble burst.
In June 2019, a 1 - for - 2 stock split: the global market tumbled at the beginning of 2020 due to the pandemic.
So, what kind of upheaval will this stock split bring? This is not alarmist talk. The bond market seems to have smelled the danger. The interest rate of SoftBank's recently issued bonds has exceeded 8%, indicating that bond investors are demanding a higher risk premium. David Gibson said, "However, the stock market seems to be ignoring this potential risk that is not fully covered by funds."
SoftBank's trust in OpenAI may exceed that in any other company in the past: in the investment return from OpenAI, SoftBank has recorded a profit of $8 billion without actually investing the money, just based on a commitment.
Wall Street analysts point out that there may be a gap of up to $54.5 billion between the total investment commitment made by SoftBank and the actual available funds, posing a risk of over - commitment.
In the latest earnings report, OpenAI was mentioned 100 times, while NVIDIA was only mentioned 14 times.
Source: Internet
Can SoftBank make a comeback by relying on OpenAI and be fearless of the bubble risk? Probably not.
An OpenAI executive mentioned in a public event that "computing - power investment may need government guarantees." This statement caused a stir, and U.S. technology stocks tumbled collectively, with the market value of the six major technology giants evaporating by over $400 billion overnight.
"The U.S. stock market faces a serious risk of decline and may experience a sharp correction in the next 6 months to 2 years," said Jamie Dimon, the CEO of JPMorgan Chase, a prominent figure on Wall Street. "The asset - price increase driven by AI is a 'worrying issue', and many assets in the market seem to be entering the bubble zone."
In October this year, Sam Altman, the CEO of OpenAI, also rarely stated that there is indeed a bubble in some parts of the AI field, and some "stupid" startups can easily obtain large amounts of funds.
Some institutions estimate that OpenAI is expected to lose over $5 billion in 2025. If it fulfills its commitment of a $14 - trillion infrastructure investment, the total cash - burning scale in the next few years may exceed $100 billion. Even with the support of giants like Microsoft, the continuous huge cash consumption puts great pressure on the company. The market generally worries that under hardware bottlenecks such as chip shortages, the cost of AI training will only increase. Once investors' confidence wavers, it is easy to trigger a chain reaction of "technological bubble burst".
Currently, OpenAI is unable to solve this funding problem and can only adopt a "circular - transaction" model to support the market. For example, while Microsoft invests approximately $13 billion in OpenAI, it designates its Azure as OpenAI's exclusive cloud provider.
Source: Internet
Another example is NVIDIA. This year, it agreed to invest up to $100 billion in OpenAI to build a large - scale data center, and OpenAI promised to purchase millions of NVIDIA GPUs to fill the racks. Oracle, an early investor in OpenAI, also signed an agreement this year to provide cloud services worth $300 billion to OpenAI over the next five years.
Paul Krugman, the Nobel laureate in economics, compares this phenomenon to "an ouroboros that devours itself": "On the surface, it's revenue from sales, but in fact, it's just the same money circulating among companies."
David Cahn, a partner at Sequoia, put it more bluntly: if a company can only survive in an "infinite - financing" environment, then it's fundamentally wrong. In the current context, he is neither blindly chasing nor overly cautious about stories like "reaching $2 million in ARR in 10 days" or "serial financing with a tripled valuation". Too much money may make founders and teams think they've already won, but the real challenge is to survive after the momentum fades.
Can OpenAI successfully go public? Probably. However, the biggest problem for OpenAI is not a lack of funds but a shortage of a huge amount of electricity.
In 2028, U.S. data centers alone will need 57 gigawatts of electricity, while utility companies can only provide a maximum of 21 gigawatts at that time, resulting in a huge gap of 36 gigawatts. In addition to electricity, there are also issues regarding land, water resources, fiber - optic networks, and even the production capacity of key grid equipment such as transformers.
Source: Internet
These physical bottlenecks cannot be solved by financial means alone. The circular transactions create an illusion of "infinite demand" but may hit a wall in the face of the reality of "limited supply".
Conclusion
Historically, each round of technology bubbles has different manifestations, and the bursting of a bubble does not mean the failure of a technological revolution. A typical example is the dot - com bubble in the early 2000s. The huge investment losses did not equal the failure of the Internet revolution. Moreover, after a brief downturn, the Internet revolution quickly gained momentum.
Therefore, industry insiders deeply involved in AI these days often say that "the risk of not investing is much greater than the risk of investing." No one wants to be left far behind by competitors in the context of an exponential revolution.
Companies that "sell oil - chips" probably won't be the ones laughing last. Those that use computing power to create products have a chance to emerge victorious from the bubble.
References:
The $10 - Trillion AI Bubble. Source: LatePost
SoftBank Liquidates NVIDIA Holdings, Cashing Out $5.8 Billion. Source: Fortune
Masayoshi Son Cashes Out to Bet on OpenAI. Source: NBD Headlines