OpenAI CEO Warns An ‘A.I. Bubble’ Is Forming

OpenAI Chief Executive Officer (CEO) Sam Altman is warning that the artificial intelligence (A.I.) market is in a bubble and reminiscent of the dot-com era of the late 1990s. In an interview with The Verge, Altman is quoted saying, “When bubbles happen, smart people get overexcited about a kernel of truth. Are we in a phase where investors as a whole are overexcited about A.I.? My opinion is yes.” Altman goes on in the interview to discuss the dot-com bubble that led to a stock market crash when heavily hyped internet-based companies imploded. Between March 2000 and October 2002, the Nasdaq Composite index lost nearly 80% of its value after many internet companies failed to generate sales or profits. Altman is the latest high-profile figure to raise concerns about A.I. investments and investor enthusiasm for A.I stocks. Bridgewater Associates’ Ray Dalio and Apollo Global Management (APO) Chief Economist Torsten Slok have issued similar warnings about an A.I. bubble recently. Apollo’s Slok wrote in a report that he believes the A.I. bubble of today is larger than the internet bubble of the late 1990s, with the top 10 companies in the S&P 500 more overvalued than they were 25 years ago. Some analysts are also pointing out that there’s an increasing amount of speculative capital chasing companies with weak fundamentals, which is indicative of a bubble. Earlier in August, Altman said that privately held OpenAI’s annual recurring revenue is on track to surpass $20 billion U.S. this year, but that the company remains unprofitable. OpenAI’s latest GPT-5 A.I. model released recently had a rocky start, with critics complaining that it has a less intuitive feel. This led OpenAI to restore access to its previous GPT-4 model for paying customers. While OpenAI remains a private company, its largest investor continues to be Microsoft (MSFT), which has pumped more than $10 billion U.S. into the start-up. MSFT stock has risen 24% this year to trade at $520.17 U.S. per share.