The valuation risks are increasing for the artificial intelligence sector. In this week’s bubble watch, focus on SoftBank (SFTBY).
Last week, SFTBY/SFTBY shares lost around 22%, giving back some of its 53% YTD gains. On June 1, the holding company, which is mostly OpenAI stock, overtook Toyota (TM) as the most valuable Japanese company.
Toyota shares traded at a 52-week low last week. Despite a P/E of 9 times, investors avoided the automobile firm on worries that consumer demand would continue to weaken.
SoftBank CEO Masayoshi Son said on CNBC that OpenAI would design its next model by using AI. That “super intelligence” contrasts with Anthropic’s approach to AI. Anthropic expressed concern that AI was developing too fast and might need to slow down.
Flawed Assumptions
Relying more on AI to advance its technology might have flaws. Models still hallucinate. That could introduce more flaws in its foundation. In addition, development without humans in the loop would remove moral and quality assurance checks and balances. AS a result, OpenAI might end up with a future model that falls behind the competition.
Already, Anthropic is ahead of OpenAI. Anthropic’s revenue grew from below $10 billion last year to around $47 billion annualized. The firm said in April that Claude Mythos could find flaws in corporate software and browsers. That led to a steep selloff in software stocks. It also raised awareness of Anthropic’s AI offering.
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