Masayoshi Son-led SoftBank Group Corp. SFTBY SFTBF is set to invest in the Amazon.com Inc. founder Jeff Bezos-backed artificial intelligence startup Perplexity AI at a valuation of $3 billion, in a bid to bolster its AI portfolio.
What Happened: SoftBank’s Vision Fund 2 is planning to invest between $10 million to $20 million in Perplexity AI, a startup that aims to utilize AI to compete with Alphabet Inc.’s GOOGL GOOG Google search, Bloomberg reported on Thursday, citing people familiar with the matter.
This investment is part of a larger $250 million funding round, which will triple Perplexity’s valuation and position it as one of the industry’s most highly valued companies.
This move underscores SoftBank’s intention to significantly accelerate its AI investment. The company’s founder, Son, recently outlined an ambitious vision for the future of AI, including the realization of “artificial super intelligence.”
SoftBank and Perplexity AI did not immediately respond to Benzinga's request for comment.
Why It Matters: This investment comes at a crucial time for SoftBank, as the company has been preparing for a significant AI investment following setbacks from its previous investments in companies like Alibaba and WeWork. This move is in line with Son’s acknowledgment of the potential for success or failure in the AI sector.
Perplexity, which is less than two years old, has already made a name for itself by providing more real-time information than other AI chatbots.
The startup’s primary service is search, and it refers to itself as an “answer engine,” providing results in text format instead of links. Perplexity has also been involved in some controversy over a product that summarizes news stories and whether the product gives outlets due credit for their work.
Despite the controversy, the investment in Perplexity is a strategic move for SoftBank, which is also expected to quicken the pace of activity around AI services. Recently, SoftBank directly invested $200 million into Tempus AI, a startup that analyzes medical data, and plans to set up a joint venture in Japan.
Moreover, SoftBank’s decision to sell its Nvidia shares in 2019 has been scrutinized, as the shares would be worth over $150 billion today. This missed opportunity underscores the importance of strategic investments in high-growth sectors like AI.
Son recently admitted the regrettable sale of Nvidia shares at a recent annual meeting of SoftBank shareholders. He called it “The fish that got away was big.” SoftBank held a 4.9% stake in Nvidia at the time, with an investment of $700 million. Although Son multiplied it over four times with a $3.3 billion return, it would have been worth $157 billion now.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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