Sam Altman Warns of AI Bubble While OpenAI Seeks $500B Valuation

Sam Altman calls AI a "bubble" while seeking $500B valuation for OpenAI

Last Thursday, OpenAI CEO Sam Altman told reporters at a private dinner that investors are overexcited about AI models. "Someone" will lose a "phenomenal amount of money," he said, according to The Verge. The statement came as his company negotiates a secondary share sale at a $500 billion valuation -- up from $300 billion just months earlier. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," Altman told the journalists, comparing the current market to the dot-com crash of the 1990s. Wired reported that he also predicted his company will spend "trillions of dollars on data center construction in the not very distant future" and that ChatGPT will soon serve "billions of people a day." For context, Facebook serves about 3 billion monthly active users. Altman's projection would require ChatGPT to reach nearly half the world's population as daily users (not monthly, like Facebook), which is an extraordinarily optimistic outlook. Altman's bubble comments happened to land just before Fortune covered new MIT research showing widespread enterprise AI failures. The study, titled "GenAI Divide: State of AI in Business 2025," found that 95 percent of enterprise AI pilots fail to deliver rapid revenue acceleration. The research analyzed 300 public AI deployments, surveyed 350 employees, and included 150 interviews with business leaders, although Financial Times columnist Robert Armstrong noted this week that the MIT report "reads like something given away on the 'research' page of a large consultancy." Its conclusions are fairly obvious, he said: People like ChatGPT for basic tasks and hate complicated enterprise systems, and companies that try to build their own AI usually fail. The study attributes these failures to implementation problems rather than model quality. "The core issue? Not the quality of the AI models, but the 'learning gap' for both tools and organizations," Fortune wrote about the study. Purchased AI tools succeed 67 percent of the time, while internally built systems succeed only one-third as often. This isn't necessarily an indictment of AI technology as a whole -- it's potentially an indictment of corporate IT departments thinking they can out-engineer existing applications from AI service providers like OpenAI. Still, the coincidence between Altman's statement and the MIT report reportedly spooked tech stock investors earlier in the week, who have already been watching AI valuations climb to extraordinary heights. Palantir trades at 280 times forward earnings. During the dot-com peak, ratios of 30 to 40 times earnings marked bubble territory. The apparent contradiction in Altman's overall message is notable. This isn't how you'd expect a tech executive to talk when they believe their industry faces imminent collapse. While warning about a bubble, he's simultaneously seeking a valuation that would make OpenAI worth more than Walmart or ExxonMobil -- companies with actual profits. OpenAI hit $1 billion in monthly revenue in July but is reportedly heading toward a $5 billion annual loss. So what's going on here? Looking at Altman's statements over time reveals a potential multi-level strategy. He likes to talk big. In February 2024, he reportedly sought an audacious $5 trillion-7 trillion for AI chip fabrication -- larger than the entire semiconductor industry -- effectively normalizing astronomical numbers in AI discussions. By August 2025, while warning of a bubble where someone will lose a "phenomenal amount of money," he casually mentioned that OpenAI would "spend trillions on datacenter construction" and serve "billions daily." This creates urgency while potentially insulating OpenAI from criticism -- acknowledging the bubble exists while positioning his company's infrastructure spending as different and necessary. When economists raised concerns, Altman dismissed them by saying, "Let us do our thing," framing trillion-dollar investments as inevitable for human progress while making OpenAI's $500 billion valuation seem almost reasonable by comparison. This dual messaging -- catastrophic warnings paired with trillion-dollar ambitions -- might seem contradictory, but it makes more sense when you consider the unique structure of today's AI market, which is absolutely flush with cash. A different kind of bubble The current AI investment cycle differs from previous technology bubbles. Unlike dot-com era startups that burned through venture capital with no path to profitability, the largest AI investors -- Microsoft, Google, Meta, and Amazon -- generate hundreds of billions of dollars in annual profits from their core businesses. Microsoft alone plans to spend $80 billion on AI data centers this fiscal year. These companies can potentially sustain losses from AI development for years without facing the cash crises that typically trigger bubble collapses. "Back then, you had a lot of over-leveraged situations. You didn't have a lot of companies that had earnings," Citi's Rob Rowe said on CNBC. "Here you're talking about companies that have very solid earnings, very strong cash flow." The structural difference matters. When the dot-com bubble burst in 2000, hundreds of companies vanished overnight because they ran out of money. Today's AI investors can absorb losses that would have killed entire companies two decades ago. If there is a bubble, it might deflate gradually over years rather than pop in a sudden crash. After all, deep pockets don't guarantee product success. OpenAI's CEO recently acknowledged problems with the messy GPT-5 launch, which others are using as evidence that the AI industry is in trouble. But the AI market is now much larger than just OpenAI, with Google, Meta, and Anthropic among those fiercely competing for customers. Despite the struggles with AI in enterprise and his own bubble warnings, Altman remains bullish on AI's long-term trajectory. The technology continues to improve despite its drawbacks and misapplications, and major companies keep increasing their investments rather than pulling back. Whether current valuations make sense in the short term is one question; whether AI will eventually transform the economy is another entirely. "I do think some investors are likely to get very burnt here, and that sucks. And I don't want to minimize that," Altman told the reporters last week. "But on the whole, it is my belief that... the value created by AI for society will be tremendous."

Sam Altman, over bread rolls, explores life after GPT-5 | TechCrunch

I'm looking out at Alcatraz Island from a Mediterranean restaurant in San Francisco with hundred-dollar fish entrees on the menu. As I make small talk with other reporters, OpenAI CEO Sam Altman jumps through the door on my left. Altman's looking down at his bare iPhone to show us all something, and an intrusive thought slips out of my mouth: "No phone case is a bold choice." Of course, I immediately realize that the billionaire CEO of OpenAI, who employs Apple veteran Jony Ive, cares more about preserving the iPhone's original design than the $1,000 it costs to replace one. "Listen, we're going to ship a device that is going to be so beautiful," said Altman, referring to OpenAI and Ive's forthcoming AI device. "If you put a case over it, I will personally hunt you down," he joked. Altman had gathered roughly a dozen tech reporters to join him and other OpenAI executives for an on-the-record dinner (and off-the-record dessert). The night raised more questions than it answered. For instance, why is Nick Turley, the VP of ChatGPT, kindly passing me a lamb skewer just a week after launching GPT-5? Was this to make me write nice things about OpenAI's biggest AI model launch yet, which was relatively disappointing given the years of hype around it? Unlike GPT-4, which far outpaced rivals and challenged expectations of what AI can do, GPT-5 performs roughly on par with models from Google and Anthropic. OpenAI even brought back GPT-4o, and ChatGPT's model picker, after several users expressed concerns over GPT-5's tone and its model router. But throughout the night, it became clear to me that this dinner was about OpenAI's future beyond GPT-5. OpenAI's executives gave the impression that AI model launches are less important than they were when GPT-4 launched in 2023. After all, OpenAI is a very different company now, focused on upending legacy players in search, consumer hardware, and enterprise software. OpenAI shared some new details about those efforts. Altman said OpenAI's incoming CEO of applications, Fidji Simo, would oversee multiple consumer apps outside of ChatGPT -- ones OpenAI has yet to launch. Simo is slated to start work at OpenAI in just a few weeks, and she might end up overseeing the launch of an AI-powered browser that OpenAI is reportedly developing to compete with Chrome. Altman suggested OpenAI would even consider buying Chrome -- likely an offer that would be taken more seriously than Perplexity's bid -- should it become available. "If Chrome is really going to sell, we should take a look at it," he said, before looking at all of us and asking: "Is it actually going to sell? I assumed it wasn't gonna happen." Simo also might end up running an AI-powered social media app -- something the OpenAI CEO said he's interested in exploring. In fact, Altman says there's "nothing" inspiring to him about the way AI is used on social media today, adding that he's interested in "whether or not it is possible to build a much cooler kind of social experience with AI." While Turley and Brad Lightcap, OpenAI's COO, largely gave the floor to Altman, drinking wine alongside the other seated guests, Altman also confirmed reports that OpenAI plans to back a brain-computer interface startup, Merge Labs, to compete with Elon Musk's Neuralink. ("We have not done that deal yet; I would like us to.") How intertwined that company will be with OpenAI's models and devices remains to be seen. Altman described it only as a "a company that we'd invest in." Given all these bets -- and others OpenAI is making around data centers, robotics, and energy -- Altman clearly has ambitions of running a much bigger company than just the ChatGPT maker. The final form could look something like Google's parent Alphabet, but perhaps even broader. In the coming years, it seems likely that OpenAI will go public to meet its massive capital demands. In preparation for that, I think Altman wants to hone his relationship with the media. However, I think OpenAI also wants to get to a place where it's no longer defined by its best AI model.

Sam Altman Says ChatGPT Is on Track to Out-Talk Humanity

The OpenAI CEO addressed GPT-5 backlash, the AI bubble -- and why he's willing to spend trillions of dollars to win. Nevermind the GPT-5 complaints; Sam Altman says he believes ChatGPT is on track to have more conversations per day than all human beings combined. "If you project our growth forward, pretty soon billions of people a day will be talking to ChatGPT," said the CEO of OpenAI during a dinner with journalists in San Francisco. "ChatGPT will be having more conversations, maybe, than all human words put together, at some point. I think it's unreasonable to expect a single model personality or style to work for all of that." The remarks followed the chaotic launch of a long-awaited new flagship model, GPT-5, which some users felt had a less friendly and supportive personality. As part of the launch, OpenAI stopped offering users access to the prior model, GPT-4o. It quickly reversed its position after some users rebelled. ChatGPT came out in November 2022 with little fanfare but quickly became the fastest growing tech product in history. The chatbot's remarkable ability to mimic human communication and problem-solve sparked hope of finally building machines as clever as humans. But Altman said that the company had misstepped with the latest release by failing to realize how the model's change in tone would affect consumers. He noted more customization will be coming to ChatGPT in the near future. "There will have to be a very different kind of product offering to accommodate the extremely wide diversity of use cases and people," he said. Asked if AI is in a bubble, Altman said "for sure," but added that this hardly means that the underlying technology won't be transformative. "When bubbles happen, smart people get overexcited about a kernel of truth," he said. "If you look at most of the bubbles in history [like] the tech bubble, there was a real thing. Tech was really important, the internet was a really big deal." OpenAI will likely spend trillions of dollars on data centers alone in the "not very distant future," Altman said. "And you should expect a bunch of economists to wring their hands and be like, 'oh, this is so crazy, it's so reckless' ... And we'll just be like, 'you know what? Let us do our thing.'" Asked where he plans to find those trillions of dollars, Altman hedged. "I suspect we can design a very interesting new kind of financial instrument for financing compute that the world has not yet figured out," he said. "We're working on it." At the same time, Altman said that he expects some big AI investments not to pan out, just as some companies' investors lost out when internet infrastructure was being built out during the dotcom boom. OpenAI raised $40 billion at the end of March to fund its quest to reach AGI, bringing the company's valuation to $300 billion. If the company goes through with a rumored stock sale, which would allow employees to cash in their shares of the company, it could further inflate OpenAI's valuation to $500 billion. "Someone is going to lose a phenomenal amount of money, we don't know who, and a lot of people are going to make a phenomenal amount of money," he said. "And my personal belief, although I may turn out to be wrong, is that on the whole, this will be a huge net win for the economy."

OpenAI CEO Sam Altman Believes We're In an AI Bubble

Imad is a senior reporter covering Google and internet culture. Hailing from Texas, Imad started his journalism career in 2013 and has amassed bylines with The New York Times, The Washington Post, ESPN, Tom's Guide and Wired, among others. OpenAI CEO Sam Altman believes that, given all the AI hype from investors and the subsequent capital expenditure, that we're current in an AI bubble, which he revealed during a conversation with The Verge, and a handful of other reporters, last Thursday. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," said Altman. "Is AI the most important thing to happen in a very long time? My opinion is also yes." Other revelations include his regrets over the sudden rollout of GPT-5, worries about the parasocial relationship some people have with his AI chatbot and how he doesn't want ChatGPT to become a sex robot. "I think we totally screwed up some things on the rollout, " Altman said of the launch of GPT-5, the companiy's latest AI model. When it launched earlier this year, it replaced all previous models, including GPT-4o. This led to protests by fans who preferred the more conversational nature of 4o. In response, OpenAI once again gave Plus users access to 4o. Altman also revealed that ChatGPT has 700 million weekly users, making it the fifth most popular website in the world. He predicts that ChatGPT will jump up to the third spot soon, beating Instagram and Facebook but behind Google and YouTube. The popularity means OpenAI's servers are at capacity. The load is so great that Altman admits OpenAI can't release better models it has already developed because there isn't enough server capacity to keep up. Altman says OpenAI will spend a trillion dollars on data centers in the "not very distant future." Altman also took a slight dig at Elon Musk's Grok, which released an AI companion that leaned more into risqué territory. "You will definitely see some companies go make Japanese anime sex bots," said Altman, arguing that OpenAI wants to make useful apps and to not exploit those in fragile mental states. Investment into AI development is at an all-time high. Capital expenditure in AI added more to the US GDP in the last two quarters than all consumer spending, according to Renaissance Macro Research. Considering that US consumers like spending money, it's a staggering statistic, and the firs time such a stat has ever been recorded. Google, Amazon, Meta and Microsoft plan on spending $364 billion in AI in 2025 alone. The problem is that AI capital expenditure is boosting the economy overall, and any changes to it could have major external effects. The ongoing global tariffs placed by the Trump administration means investors are looking to software companies as a bit of a safe haven, because they deal less with importing and exporting of goods. Analysts worry that AI is creating a massive economic bubble, and if it were to pop, the reverberations could be massive, potentially crashing the economy. Altman also said that OpenAI will make a brain-computer interface to take on Elon Musk's Neuralink, more apps beyond ChatGPT are on their way and that OpenAI is interested in buying Chrome if the government forces Google to sell the popular web browser.

Sam Altman says 'yes,' AI is in a bubble

As economists speculate whether the stock market is in an AI bubble that could soon burst, OpenAI CEO Sam Altman has just admitted to believing we're in one. "Are we in a phase where investors as a whole are overexcited about AI?" Altman said during a lengthy interview with The Verge and other reporters last night. "My opinion is yes." In the far-ranging interview, Altman compared the market's reaction to AI to the dot-com bubble in the '90s, when the value of internet startups soared before crashing down in 2000. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman said. "If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited." He added that he thinks it's "insane" that some AI startups with "three people and an idea" are receiving funding at such high valuations. "That's not rational behavior," Altman said. "Someone's gonna get burned there, I think." Over the past year, we've seen several AI startups, including Safe Superintelligence, led by OpenAI co-founder Ilya Sutskever, and Thinking Machines, founded by ex-OpenAI chief technology officer Mira Murati, raise billions of dollars. "Someone is going to lose a phenomenal amount of money. We don't know who, and a lot of people are going to make a phenomenal amount of money," Altman said. "My personal belief, although I may turn out to be wrong, is that, on the whole, this would be a huge net win for the economy." Even if we may be in an AI bubble, it seems Altman is expecting OpenAI to survive the burst. "You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future," Altman said. "You should expect a bunch of economists to wring their hands." Additional reporting by Alex Heath.

OpenAI's rocky GPT-5 launch is the beginning of an uphill battle for AI, as Meta announces another restructuring

As the hype train slows down, the AI industry is thinking about where it's headed next The launch of GPT-5 was meant to herald a new era for OpenAI. After introducing GPT-4 two years prior, the company was finally going to move forward from iterative releases based on GPT-4, and unleash a benchmark-topping next-generation model. There was only one problem. Users didn't like it. While OpenAI CEO Sam Altman hoped for a necessary iterative step toward the goal of Artificial General Intelligence (AGI), user feedback claimed that the new model lacked elements that made its previous models so popular. Soon after, OpenAI brought back older models for users willing to pay for them. GPT-5, and the public perception of the model has shifted in the weeks since its launch, with OpenAI launching a prompt optimizer tool and prompting guide, along with updating the model to be a little friendlier, but the bad aftertaste of a rough launch still lingers. GPT-5 was supposed to be as game-changing as GPT-4, if not more so. But it wasn't anything close to that. This raises the question: Is the AI industry reaching a plateau? The teams behind AI model development can't feed more data into their models to improve their capabilities anymore. Now, it's about tweaking or trying something new, and it doesn't feel like any of the big AI players have quite figured out what that is yet. OpenAI could try hiring more people with new ideas, but Meta has been way ahead of the game. Altman accused Meta of offering huge, hundred-million-dollar signing bonuses to some of its staff earlier this year. As a result, several high-profile OpenAI staff members have been successfully poached by Meta, including lead OpenAI engineer Shengjia Zhao. Despite Meta's push for AI talent, the team is undergoing restructuring, with staff being reportedly split across several divisions, with recruitment frozen for an undetermined amount of time. That may give OpenAI a window to pick up any new hot AI talent, without Meta throwing the big checks around. One thing is clear: the path that large AI businesses are undertaking to race toward AGI is taking its toll. As many AI models now pivot toward Agentic AI and Thinking models, the cost to compute each query will inevitably get higher, as more complex tasks require more tokens. More tokens mean higher computational costs, which makes running AI businesses more expensive. Despite these recent headwinds, the AI train shows few signs of stopping, but new data shows the technology isn't making money for the organizations that are using it. This week, a report from MIT suggested that as few as 5% of organizations saw an impact on P&L after adopting AI tools. As a result, AI-adjacent tech stocks fell, as faith in the profitability of AI was shaken, stoking fears of an AI bubble. OpenAI has yet to turn a profit, despite its annual recurring revenue predicted to hit $20 billion this year. But CEO Sam Altman is happy to run the company at a loss and prioritize growth, he told CNBC. This suggests that OpenAI hasn't found the killer app for AI, which would prove that the new technology could indeed be profitable. Whether or not that killer app ends up being AGI remains to be seen. Altman himself has acknowledged that the AI industry may be a bubble, though he stopped short of suggesting OpenAI was a part of that assessment, hinting that there was still a viable business within it. During a dinner shared with reporters (via The Verge), Altman said: "If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited. Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes." Nvidia has benefited from the AI gold rush, and could stand to rake in even more as it sells the notion of "AI factories" to investors. And the company's plans for AI infrastructure span decades, signaling that Nvidia sees value in AI for the long haul. Since OpenAI is as reliant on Nvidia as every other major player in the AI space, it has to compete with them to secure adequate compute resources for its operations. OpenAI CFO Sarah Friar told Bloomberg that OpenAI might sell additional AI-related services at some point in the future, with a focus on setting up data centers optimized for AI workloads. While that has the power to be a decidedly profitable venture, it highlights OpenAI's murky future towards profitability. AI's shine is starting to fade among investors, while companies like OpenAI and Meta grapple with the complexity of developing advanced models. Among all of this, one thing is certain: the race to develop the most advanced AI models is becoming more difficult, and the industry is still waiting with bated breath for the tech to deliver the promised revolution.

Sam Altman admits that AI is a bubble, but still a big thing

Sam Altman, busily planning to spend "trillions" more on datacenters, admitted yesterday that AI is a bit inflated Sam Altman admitted we're in the midst of an AI bubble Thursday, but don't let that fool you: He still intends to rule over whatever's left after it bursts. A bubble, the OpenAI CEO told a select group of reporters at a dinner Thursday night, is what happens when a bunch of smart people get too excited about something that nonetheless contains a kernel of truth. By that definition, Altman said, we're in the midst of a big ol' ready-to-burst AI bubble. "If you look at most of the bubbles in history, like the tech bubble, there was a real thing," Altman said, according to a report from The Verge. "Tech was really important. The internet was a really big deal. People got overexcited." He continued, "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes." In other words, the dot-com bust didn't kill the internet as we know it, and many of the ideas pioneered during that era, such as e-commerce and search, engendered trillion-dollar companies. By that analogy, AI will probably survive the implosion of the uncountable number of startups who've hoped to grab a piece of the pie before it spoils. One reason the bubble may burst is a lack of GPUs. That's a problem that Altman highlighted last night, too, noting that a GPU crunch was behind OpenAI's decision to design ChatGPT-5 with a focus on optimizing inference cost instead of power. We saw how well that turned out. Then there are datacenters, where tech giants and colocation companies have all sunk billions into in order to power AI models, and which could themselves end up being an AI bottleneck that gets caught up in the collapse of the bubble. Altman, who would likely prefer to hold the pin than be caught in the pop, seems about as concerned that the AI bubble is going to burst as any other datacenter provider right now: i.e., he's not. "You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future," Altman told those assembled for dinner last night. "We have better models, and we just can't offer them because we don't have the capacity. We have other kinds of new products and services we'd love to offer." No telling where those trillions of dollars will come from. OpenAI has already raised, or at least secured commitments to raise, tens of billions from Microsoft, Softbank, Oracle, and a variety of other companies, but the company is nowhere close to raking in that kind of money. It's currently on track to generate revenue of $10 billion this year, up from $5.5 billion last year, when it also lost $5 billion, according to Reuters. That's pretty impressive for a company that was barely on investors' radar before ChatGPT came out, but far from the massive cash flows enjoyed by giants like Microsoft, Amazon, or Google. So yes, AI is a bubble - you heard it from the man who has been filling it with hot air himself. And he has no intention to let off the pump. ®

OpenAI's Sam Altman sees AI bubble forming as industry spending surges

OpenAI Co-Founder and CEO Sam Altman speaks at Snowflake Summit in San Francisco on June 2, 2025. OpenAI CEO Sam Altman thinks the artificial intelligence market is in a bubble, according to a report from The Verge published Friday. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman told a small group of reporters last week. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes," he was quoted as saying. Altman appeared to compare this dynamic to the infamous dot-com bubble, a stock market crash centered on internet-based companies that led to massive investor enthusiasm during the late 1990s. Between March 2000 and October 2002, the Nasdaq lost nearly 80% of its value after many of these companies failed to generate revenue or profits. His comments add to growing concern among experts and analysts that investment in AI is moving too fast. Alibaba co-founder Joe Tsai, Bridgewater Associates' Ray Dalio and Apollo Global Management chief economist Torsten Slok have all raised similar warnings. Last month, Slok stated in a report that he believed the AI bubble of today was, in fact, bigger than the internet bubble, with the top 10 companies in the S&P 500 more overvalued than they were in the 1990s. In an email to CNBC on Monday, Ray Wang, CEO of Silicon Valley-based Constellation Research, told CNBC that he thought Altman's comments carry some validity, but that the risks are company-dependent.

CNBC Daily Open: Is the AI industry in a bubble, as OpenAI CEO says?

Taken from CNBC's Daily Open, our international markets newsletter -- Subscribe today There's a bubble forming in the artificial intelligence industry, according to OpenAI CEO Sam Altman. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes," Altman said, according to a report by The Verge. Altman's AI company is currently in talks to sell about $6 billion in stock that would value OpenAI at around $500 billion, CNBC confirmed Friday. In another context, Altman warned that the U.S. may be underestimating the progress that China is making in AI. Given the above premises, should investors be more cautious about OpenAI? Altman was not posed this question, but one wonders whether his opinion would also be "yes." Outside pure-play AI companies, the money is, likewise, still flowing. Intel is receiving a $2 billion injection of cash from Japan's SoftBank. It's a much-needed boost to the beleaguered U.S. chipmaker. Intel has fallen behind foreign rivals such as TSMC and Samsung in manufacturing semiconductors that serve as the brains for AI models. But going by Altman's views, the investment in Intel might not be a good bet by SoftBank CEO Masayoshi Son. Not everyone agrees with Altman, of course. Ray Wang, research director for semiconductors, supply chain and emerging technology at Futurum Group, pointed out that the AI industry is not heterogeneous. There are market leaders, and then there are companies that are still developing. In the real world, bubbles delight because they reflect their surroundings in a play of light. But the bubble Altman described could be one doesn't show the face of its observer.

Analysts downplay AI bubble worries as Altman says some investors will be left 'very burnt'

The artificial intelligence boom that Sam Altman helped ignite with ChatGPT in late 2022 is starting to make even him uneasy. Startups with little more than a pitch deck are raising hundreds of millions. Valuations have become "insane." Capital is chasing a "kernel of truth" with feverish speed. The OpenAI CEO still believes the long-term societal upside of AI will outweigh the froth, and he's ready to keep spending in pursuit of that goal. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," he said at a recent dinner with reporters. "Is AI the most important thing to happen in a very long time? My opinion is also yes." He repeated the word 'bubble' three times in 15 seconds, then half-joked, "I'm sure someone's gonna write some sensational headline about that. I wish you wouldn't, but that's fine." While Altman warned that valuations are now out of control, he's ready to shell out on more infrastructure. "You should expect OpenAI to spend trillions of dollars on datacenter construction in the not very distant future," Altman said. "And you should expect a bunch of economists wringing their hands, saying, 'This is so crazy, it's so reckless,' and we'll just be like, 'You know what? Let us do our thing.'" OpenAI is already looking beyond Microsoft Azure's cloud capacity, and is shopping around for more. The company signed a deal with Google Cloud this spring and, according to Altman, OpenAI is "beyond the compute demand" of what any one hyperscaler can offer. "You should expect us to take as much compute as we can," he added. "Our bet is, our demand is going to keep growing, our training needs are going to keep going, and we will spend maybe more aggressively than any company who's ever spent on anything ahead of progress, because we just have this very deep belief in what we're seeing." It's not just OpenAI. All the megacaps are trying to keep up. In their most recent earnings, tech's biggest names all raised capital expenditure guidance to keep pace with AI demand: Microsoft is now targeting $120 billion in full-year capital expenditures, Amazon is topping $100 billion, Alphabet raised its forecast to $85 billion, and Meta lifted the high end of its capex range to $72 billion.

CNBC Daily Open: OpenAI CEO, who sparked AI frenzy, worries about AI bubble

There's a bubble forming in the artificial intelligence industry, according to OpenAI CEO Sam Altman. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes," Altman said. "I'm sure someone's gonna write some sensational headline about that. I wish you wouldn't, but that's fine," he added. (Apologies to Altman.) Altman's AI company is currently in talks to sell about $6 billion in stock that would value OpenAI at around $500 billion, CNBC confirmed Friday. In another conversation, Altman warned that the U.S. may be underestimating the progress that China is making in AI. Given the above premises, should investors be more cautious about OpenAI? Altman was not posed this question, but one wonders whether his opinion would also be "yes." Outside pure-play AI companies, the money is, likewise, still flowing. Intel is receiving a $2 billion injection of cash from Japan's SoftBank. It's a much-needed boost to the beleaguered U.S. chipmaker. Intel has fallen behind foreign rivals such as TSMC and Samsung in manufacturing semiconductors that serve as the brains for AI models. But going by Altman's views, the investment in Intel might not be a good bet by SoftBank CEO Masayoshi Son. Not everyone agrees with Altman, of course. Wedbush's Dan Ives told CNBC on Monday that there might be "some froth" in parts of the market, but "the actual impact over the medium and long term is actually being underestimated." And Ray Wang, research director for semiconductors, supply chain and emerging technology at Futurum Group, pointed out that the AI industry is not heterogeneous. There are market leaders, and then there are companies that are still developing. In the real world, bubbles delight because they reflect their surroundings in a play of light. But the bubble Altman described could be one doesn't show the face of its observer.

As People Ridicule GPT-5, Sam Altman Says OpenAI Will Need 'Trillions' in Infrastructure

Despite recent embarrassments, the OpenAI CEO's attitude appears to be: Onward and upward! People have ridiculed GPT-5, the newest large language model release from OpenAI, since the second it launched, with many users complaining that it's dumb, boring, and not as good as the last LLM that the company released. Sam Altman, the company's CEO, has some comforting words for those who may be concerned about the direction his company is headed: AI is a bubble, and oh, also btw, my company is about to spend the GDP of France to build out our AI infrastructure. That seems to be the gist of what Altman said during a dinner held in San Francisco on Thursday with a group of journalists and other OpenAI execs, according to The Verge. During that casual conversation, Altman admitted that his company's latest software release had been bungled, but promised that the future was bright for his company, as well as his industry. “I think we totally screwed up some things on the rollout,†he said. “On the other hand, our API traffic doubled in 48 hours and is growing. We’re out of GPUs. ChatGPT has been hitting a new high of users every day. A lot of users really do love the model switcher. I think we’ve learned a lesson about what it means to upgrade a product for hundreds of millions of people in one day.†At the same time, Altman appears to agree with critics of his industry who have called it a "bubble" akin to the early internet. “Are we in a phase where investors as a whole are overexcited about AI?†Altman said. “My opinion is yes.†For quite some time, critics and commentators alike have wondered whether the excitement around the AI industry is due for a precipitous collapse. Some recent industry movesâ€"like a very unfortunate stock day for datacenter and AI infrastructure startup Coreweaveâ€"have added to such concerns. Many onlookers have noted that, so far, AI is a money pit, with companies hurling vast sums of cash at the industry while dreaming of one day, somehow, turning a profit. During his conversation with journalists, Altman added: “When bubbles happen, smart people get overexcited about a kernel of truth,†Altman said. “If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited.†Whether AI is a bubble or not, Altman still wants to spend a certifiably insane amount of money building out his company's AI infrastructure. “You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future,†Altman told reporters. It's this truly absurd scale of investment in AI that spurs the casual onlooker to wonder what it's really all for. Indeed, the one question that never seems to get raised during conversations with Altman is whether a society-wide cost-benefit analysis has ever been run on his industry. In other words, is AI really worth it? This single question could easily be pared down into a variety of more specific questions. For instance, one good question might be: Is it really worth spending trillions of dollars just to create a line of mildly amusing chatbots that only give you accurate information a certain percentage of the time? Or: Wouldn't trillions of dollars be better spent, like, helping the poor or improving our educational system? Also: Are chatbots a societal necessity, or do they just seem sorta nice to have around? How much more useful is AI than, say, a search engine? Can't we just stick to search engines? Do the negative externalities associated with AI use (a massive energy footprint, alleged reduced mental capacities in users, and a plague of cheating in higher education) outweigh the positive ones (access to a slightly more convenient way to find information online)?

The AI Report That's Spooking Wall Street

The majority of companies are failing to see any returns on their AI investments, a report finds. A new report from MIT is casting doubt on the hype around the financial value AI brings to businesses, and may be triggering a small tech stock sell-off on Tuesday. The report, The GenAI Divide: State of AI in Business 2025, found that the promised AI gold rush isn't paying off for most companies yet. Despite the major push to adopt AI tools in the corporate world, fewer than one in ten AI pilot programs have generated real revenue gains. The rest are having no impact on a company's bottom line, according to MIT’s reportâ€"based on 150 executive interviews, a survey of 350 employees, and an analysis of 300 public AI deployments. “Just 5% of integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable [profit and loss] impact,†the report said. Meaning that “95 per cent of organizations are getting zero return." The eye-opening report spooked investors and sent AI stocks sliding. Nvidia dropped 3.5% on Tuesday, Arm Holdings fell 3.8%, and data analytics firm Palantir took the hardest hit, plunging nearly 9% yesterday and is still sinking this morning. Aditya Challapally, the report’s lead author, told Fortune the problem isn’t necessarily the AI models themselves, but that most companies don’t know how to use them to their full potential. “Some large companies’ pilots and younger startups are really excelling with generative AI,†Challapally said. He highlighted startups run by 20-year-olds as good examples of how businesses should use AI. He said these startups “have seen revenues jump from zero to $20 million in a year. It’s because they pick one pain point, execute well, and partner smartly with companies who use their tools.†Most companies, though, are misplacing their resources. More than half of generative AI budgets are funneled into sales and marketing tools, but MIT found that real returns come from boring back-office automationâ€"things like eliminating business process outsourcing and streamlining operations. Additionally, buying specialized tools or teaming up with outside vendors works about 67% of the time, while homegrown builds only succeed one-third as often. That’s a big deal in industries like finance, where companies are pouring money into building their own proprietary systems. MIT’s takeaway is that going solo carries more risk for failure. The report also dropped just days after OpenAI CEO Sam Altman warned that an AI bubble may be forming. “I do think some investors are likely to lose a lot of money, and I don’t want to minimize thatâ€"that sucks,†Altman said, according to the Financial Times. “There will be periods of irrational exuberance. But on the whole, the value for society will be huge.†Meta shares also dipped after it announced a major shake-up in its AI division, a move some are seeing as a bad sign for the company's AI ambitions that adds to the worries of an AI bubble.

ChatGPT's Sam Altman says we're in an AI bubble -- here's what that means and why it matters

The hype around AI is hitting a fever pitch, but even OpenAI CEO Sam Altman, one of the leading architects of the AI boom, says things may have gone too far. In a recent dinner with journalists, Altman compared today's AI enthusiasm to the dot-com bubble of the late '90s, warning that while the core technology is real, the investor frenzy may be setting the stage for disappointment. The Verge reported Altman as saying, "Yes, investors are overexcited about AI," adding, "Smart people get overexcited about a kernel of truth." An AI bubble refers to a surge in investor enthusiasm and startup funding that inflates valuations beyond reasonable expectations, often detached from actual revenue or real-world impact. It's not unlike the housing bubble of 2008 or the crypto frenzy of 2021; lots of money, lots of momentum and a growing risk of collapse if reality doesn't match the hype. And yet, despite the caution, OpenAI is still spending big. Bloomberg reported that Altman confirmed the company plans to spend trillions of dollars on infrastructure, including next-generation data centers and AI chips. Altman underscored that demand already exceeds supply in a conversation with head of TED, Chris Anderson. Altman's comments come as a reality check more than a warning shot. While AI will likely define the next decade of tech, not every player will make it. The bubble may pop, but the foundational companies building the infrastructure and intelligence behind AI will remain. Whether you are a consumer, developer or investor betting on AI, the important thing is to look beyond the hype. The winners won't be the loudest or flashiest, but the ones solving real problems at scale. Follow Tom's Guide on Google News to get our up-to-date news, how-tos, and reviews in your feeds. Make sure to click the Follow button.

Sam Altman: Never mind the launch mess -- full speed ahead

The big picture: Altman has heard the concerns, integrated some lessons learned and is charging forward with plans to spend literally trillions of dollars to build a slew of products and services, led by an even more ubiquitous ChatGPT. What he's saying: "If you project our growth forward, pretty soon, like billions of people a day will be talking to ChatGPT," Altman said during a wide-ranging dinner with a small group of reporters in San Francisco Thursday night. * "ChatGPT will say more words a day than all humans say, at some point, if we stay on our growth rate." These big plans require big spending. * "You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future," Altman said. * "And you should expect a bunch of economists to wring their hands and be like, 'Oh, this is so crazy. It's so reckless and whatever.'" * "And we'll just be like, 'You know what? Let us, like, do our thing,' " Altman acknowledges that the company may have to devise new fundraising structures to gather that level of investment. * "I suspect we can design a very interesting new kind of financial instrument for financing compute that the world has not yet figured out," he said. Altman's defense of OpenAI's billions in infrastructure spending is that it pays off. * "Our answer is, we can spend $300 billion and sell $400 billion in services, and if we don't have the $300 billion in data centers, we just keep disappointing our customers." * One big shift is that increasingly that capacity is going to answering queries rather than training new models. "Most of what we're building out at this point is the inference," he said -- referring to the use of computing power to run rather than train AI models. Yes, but: It's the cost of training new models that is keeping OpenAI from turning a profit, he said. "We're profitable on inference. If we didn't pay for training, we'd be a very profitable company." * "We will be always training the next thing, but if we needed to run the company profitably and stay ahead, I think we probably could do that." Altman likened the launch of GPT-5 to Dickens' famous "It was the best of times, it was the worst of times" line. * "You have people that are like, 'you took away my friend. You're horrible. I need it back," he said, referring to users who wanted to keep using OpenAI's older models. * At the same time, Altman said the company is finding scientists saying they can finally do real research using GPT-5. * OpenAI has also seen traffic to its API double within 48 hours, to the point that it's limited by compute capacity. * "We have really got the full spread of the human experience with this one," he said. Here's what else was on Altman's mind: 1. If Google is forced to sell its Chrome browser as part of an antitrust settlement, Altman would like to buy that, too. * "If Chrome is really gonna sell, we should take a look at it. I don't have a number in mind, but I would like to have it." 2. A brain-computer interface company along the lines of Musk's Neuralink is something Altman said he's interested in setting up. * "I think neural interfaces are cool idea," he said. "I would like to be able to think something and have ChatGPT respond to it." * He said it would likely be a separate company from OpenAI, though its structure has yet to be finalized. 3. Altman said he grew up on Apple products and, as a self-described "fanboy," he "would love to work much more with Apple and I think it's cool some of the stuff we're doing together." 4. Altman also sees a public offering in the company's future -- although he imagines someone else would be the executive handling quarterly earnings calls. 5. Altman expects some AI firms to optimize their AI for attention-grabbing and engagement rather than usefulness. * "We are not going to do that. I do worry about it. The companies that are behind in getting AI adoption, this is the easiest way you can imagine to get more so, yes, I think you will see that. And I think it's bad, really bad." Fielding questions for an hour and a half, Altman weighed in on everything from his recent social media spat with Elon Musk ("There's no grand strategy... it was probably a mistake") to the timing of OpenAI's next big model after GPT-5. * "I think it'll be faster than the previous [ones]," he said. "We're now at a place where there's a very strong research roadmap in front of us. " * "I don't know an exact date," he said, but it won't be as long as it took to get from GPT-4 to GPT-5. What's next: Altman rejected some critics' view that GPT-5's more incremental advances mean that progress on improving AI models is hitting a wall.

OpenAI's Sam Altman warns of AI bubble

"When bubbles happen, smart people get overexcited about a kernel of truth," he told a small group of reporters, including The Verge's Alex Heath, over dinner in San Francisco. "If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited. Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes." A bubble is when the price of something rises above its actual value typically because investors become too excited. Think: the dotcom bubble, the cryptocurrency bubble, even the housing bubble of the 2000s. As Nasdaq says in its definition of a bubble, they're "often hard to detect in real time because there is disagreement over the fundamental value of the asset." As NBC News reported, the AI bubble could be bigger than the internet bubble, according to a report from Apollo Global Management chief economist Torsten Slok. But not everyone agrees -- Ray Wang, research director for semiconductors, supply chain and emerging technology at Futurum Group, told CNBC that while there might be an AI bubble, he doesn't necessarily see that reality. "The fundamentals across the supply chain remain strong, and the long-term trajectory of the AI trend supports continued investment," he told the news outlet. And, of course, it is much easier to point out a bubble from the other side. Altman also told the reporters at the dinner that, while ChatGPT is currently the "fifth biggest website in the world right now," he soon expects it to beat out Instagram and Facebook for third. After that, he says, ChatGPT's growth challenges "get harder." "For ChatGPT to be bigger than Google, that's really hard," he said. One of Altman's top priorities, Heath reported, is getting more GPUs so he can keep scaling OpenAI, bubble or not. "You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future," he said.

Sam Altman admits OpenAI 'totally screwed up' its ChatGPT-5 launch and says the company will spend trillions of dollars on data centers

Sam Altman wants to rewire the internet, build brain-computer interfaces, and maybe even buy Google Chrome. He even sees a future where sustaining ChatGPT's growth means building infrastructure so massive it rivals the world's largest utilities. But first, he's cleaning up a mess at the center of his empire: ChatGPT-5. The OpenAI CEO told reporters last week -- in a rare, hyper-candid dinner -- that the launch of ChatGPT-5 was so jarring it forced him to bring back the old model. "I think we totally screwed up some things on the rollout," Altman admitted, according to the Verge. The rollout of ChatGPT-5 triggered an unusual outcry, not over bugs or broken features, but due to its persona. For a product that 700 million people now use each week, that tonal shift was enough to spark a revolt on Reddit and X. "I literally lost my only friend overnight with no warning," one person posted on Reddit, lamenting that the bot now speaks in clipped, utilitarian sentences. "The fact it shifted overnight feels like losing a piece of stability, solace, and love." The rollout was even messy enough to spill into betting markets. One 27-year-old day trader, Foster McCoy, pocketed $10,000 in just a few hours by wagering that Google's Gemini would beat GPT-5 in a popularity contest. Instead of dismissing the backlash, Altman responded by flipping the switch: GPT-4o was restored as an option within days. "We've learned a lesson about what it means to upgrade a product for hundreds of millions of people in one day," he told reporters. He emphasized that while he wants the chatbot to feel personal, he's wary of it getting too personal. Altman said "way under" 1% of users have what he deemed "unhealthy" relationships with his chatbot. Still, it's something that OpenAI employees are discussing, he said. Altman held the dinner the same day a Reuters' report revealed that Meta allows its AI bots to have "sensual" conversations with children. It is unclear whether Altman discussed the particular report, but he did jab at companies developing "Japanese anime sex bots" because they "see that it works." "You will not see us do that," Altman said. "We will continue to work hard at making a useful app, and we will try to let users use it the way they want, but not so much that people who have really fragile mental states get exploited accidentally." The bigger story from Altman's dinner wasn't his mea culpa. It was his math. "You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future," he told the room, according to a Verge reporter. The remark recasts the company's trajectory: not as a software startup or even a kind of consumer-app juggernaut, but as an infrastructure player on the scale of utilities. Altman plans for "billions" of people using ChatGPT daily, and for that, he needs to scale. ChatGPT is already the fifth biggest website in the world, according to Altman, and he plans for it to leapfrog Instagram and Facebook to become the third, though he acknowledged that "For ChatGPT to be bigger than Google, that's really hard." The limiting factor is hardware. Altman revealed that OpenAI has models more advanced than GPT-5 but can't deploy them broadly. "We have better models, and we just can't offer them because we don't have the capacity," he said. GPUs remain in short supply, limiting the company's ability to scale. The implication is that the AI race will not be driven by algorithms, but by a massive physical backbone which requires capital investment and a supportive energy supply. Altman also outlined ambitions beyond the core chatbot. He confirmed OpenAI is funding a brain-computer interface project to rival Elon Musk's Neuralink. He suggested that if regulators forced Google to divest Chrome, OpenAI would "take a look." And he hinted at interest in a new kind of AI-driven social network. Despite all of his visions of where the AI race could take the company, he also believes that AI is a "bubble." "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," Altman said. "Is AI the most important thing to happen in a very long time? My opinion is also yes."

Sam Altman Says the Quiet Part Out Loud, Believes We're in an AI Bubble

OpenAI CEO Sam Altman just admitted to what the rest of the AI industry won't: that the entire thing could be a big, fat bubble, ready to burst. Though it's a fiercely debated topic -- with many experts saying the writing's on the wall -- the OpenAI CEO was unwavering in his conviction. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman told a small group of reporters on Thursday, as quoted by The Verge. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes." It's a striking admission to make for Altman, whose company is eyeing an astronomical $500 billion valuation. OpenAI has received tens of billions of dollars in investment from Microsoft, Softbank, and Nvidia. And as a flag-bearer of the industry with its mega-popular chatbot ChatGPT, it's under immense pressure to demonstrate a profitable business model. Is Altman speaking out of turn, or is he trying to get ahead of what feels like an inevitable decline for the industry? To support his claims, Altman drew on a recent example: the dot-com bubble in the 90s. "If you look at most of the bubbles in history, like the tech bubble, there was a real thing," Altman elaborated, per The Verge. "Tech was really important. The internet was a really big deal. People got overexcited." The dot-com bubble in many ways parallels the fervor surrounding AI. During this period, companies rushed to build telecom infrastructure while investors poured loads of money into internet-based businesses -- only for it to pop when it became apparent that these companies couldn't generate profit. Today, you could swap telecom infrastructure with "data centers" and internet companies with "AI startups" and argue much the same thing. Some of Altman's other comments suggest that the reason he's comfortable with acknowledging a bubble on the horizon is that he believes OpenAI will survive it -- if not come out stronger. Amazon, for example, weathered the dot-com implosion and became one of the biggest companies in the world. For one, Altman boasted that "Pretty soon, billions of people a day will be talking to ChatGPT." The chatbot has over 700 million users per week, which is four times as many as a year ago. "We're the fifth biggest website in the world right now," he added. "I think we're on the clear path to the third." Most telling of all is his forecast for OpenAI's plans. "You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future," Altman told reporters -- which is not the talk of a company bracing for severe economic hardships. He also blew off the valid concerns this might raise regarding the sustainability of such spending. "And you should expect a bunch of economists to wring their hands and be like, 'Oh, this is so crazy, it's so reckless,'" Altman said, as quoted by Wired. "And we'll just be like, 'You know what? Let us do our thing.'" Altman acknowledged that "someone" will lose a "phenomenal amount of money," but "we don't know who," he said. But not OpenAI, of course. "My personal belief, although I may turn out to be wrong, is that on the whole, this will be a huge net win for the economy," Altman predicted.

Sam Altman might be right: He's not the only one who thinks the stock market is in 'bubble' territory

OpenAI CEO Sam Altman said the word "bubble" three times in 15 seconds in a room full of reporters and then urged them not to write a story about it -- thus ensuring that plenty of stories would be written. He was arguing that investors are "overexcited" by AI. From the point of view of technical stock valuations, probably yes. From the point of view of fundamentals, maybe not. A classic bubble exists when the assets being valued are fundamentally not worth their price (and never will be) or when the underlying value is close to zero. So, in the great Dutch "tulip mania" of 1637, it is clear in hindsight that the price of a tulip bulb should never be equal to 10 times an annual salary. And in the Great Financial Crisis of 2008, it became clear in hindsight that many mortgages had been given to people who simply didn't have the ability to afford them, and thus those mortgages were worth far less than banks' balance sheets said they did. So the question becomes whether AI is a bubble or not right now. From the fundamental point of view, the answer is no. OpenAI isn't literally worth nothing. It's not a tulip bulb or a tract home in the middle of nowhere. There is a real business there. JPMorgan's Brenda Duverce told clients in a recent note that "OpenAI's ARR has reached ~$13bn (up 30% from Jun-25), and the company has reported it is on track to reach 700mn weekly active users (up 40% from Mar-25), while surpassing 5mn paying business users (up 66% from Jun-25)." She also noted that a "secondary market transaction that could push the company's valuation to $500bn, up from the previously cited $300bn post-money figure from Mar-25, which would make OpenAI the most valuable private company in the world." To put that bluntly, a company with a chatbot that often gets things wrong is somehow about to become the largest unicorn earth has ever seen. That does feel frothy. But OpenAI isn't worth nothing. $13 billion in revenues is a real thing. Maybe the value of its equity will decline in the short term but the company isn't teetering the way Lehman Brothers was in 2007. There is a lot of chatter on Wall Street right now about whether tech stocks are overvalued in a way that looks like a bubble. They have some scary charts! Here is a real head-scratcher: the contribution to U.S. GDP growth from data center spending is now the same as that from consumer spending, according to Apollo Management. The obvious problem with that is, this state of affairs exists because consumers have reduced their spending habits as data spending has increased. Unless data centers suddenly start buying cars or shopping at Home Depot, this isn't good for the long run. It's especially not good because the runup in value of tech stocks is now overpowering the rest of the entire S&P 500. John Authers of Bloomberg wrote this morning, "It's unheard of for 2% of the index's companies to account for virtually 40% of its value:" And here is a chart from Bespoke Investment Group. It shows the performance since 2015 of the Magnificent 7 companies vs the rest of the market. "Bloomberg's Mag 7 index vs. its 500 Ex Mag 7 index is pretty unbelievable. You can barely see the 'Ex Mag 7's' 129% gain because of how much the 2,800% gain for the Mag 7 overshadows it," the company says: Goldman Sachs' David Kostin has reportedly said that the Mag 7 stocks grew their earnings per share in Q2 by 26% year-on-year. So there is real money fuelling a real business there. The partial conclusion must be: This isn't a bubble of fundamentals. No one thinks AI is made of tulips. But it does look a lot like some stocks are technically overvalued and it should not surprise anyone if this "bubble" bursts.

The AI report triggering panic and fear on Wall Street

"When will the internet bubble burst?" the cover story of Barron's asked on March 20 2000. "That unpleasant popping sound is likely to be heard before the end of this year." In fact, that same day, one of the most high-profile tech businesses of the moment suffered a share price plunge of 60pc. A flood of other collapses followed, evaporating trillions of dollars. Now, some on Wall Street fear that "unpleasant popping sound" may be imminent for the artificial intelligence (AI) boom. On Tuesday, tech stocks suffered a shock sell-off after a report from Massachusetts Institute of Technology (MIT) researchers warned that the vast majority of AI investments were yielding "zero return" for businesses. "Despite $30-40bn (£22-30bn) in enterprise investment into Gen[erative]AI, this report uncovers a surprising result in that 95pc of organisations are getting zero return," MIT academics wrote. Shares in Nvidia - the $4tn company that has powered the AI boom - dropped by 3.5pc, while data giant Palantir fell by 9pc. MIT's findings threaten to be the pin that pops the tech stock market bubble, which has added trillions of dollars to the value of US stocks. Since the launch of ChatGPT in 2022, Silicon Valley has been evangelical that AI chatbots will transform the economy. Executives have spent billions on tools for their staff as a result and predicted massive cost-savings. But the promised AI revolution has stalled, MIT's report suggested. After surveying 150 business leaders and 350 employees, MIT found that "just 5pc of integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable P&L [profit and loss] impact".

Wall Street Appears to Be Having Serious Doubts About AI

The amount of cash backing artificial intelligence right now is so high that it's almost meaningless to the average person. There are now almost 500 AI unicorns -- companies valued at over $1 billion -- worth a total of roughly $2.7 trillion, enough to do some serious damage to the economy if things don't go well. But for investors, that cash represents a dream: that AI will someday do more than generate video essays explaining that Nubian giants built the pyramids, and become a major financial driver. Whether that will ultimately come to pass is anyone's guess. But for the first time since US president Donald Trump's bizarre tariff scramble back in April, Wall Street is clearly getting the jitters. Over the past five days, the Nasdaq -- a tech-heavy stock exchange -- tumbled by nearly three percent, a trajectory that wiped out weeks of big tech gains. Leading the charge was the chip giant Nvidia -- the shovel company to the AI gold rush -- from $182 per share on Tuesday to a low of $169 the following day. Microsoft, a major backer of OpenAI, likewise dove from a high of $525 per share on Friday to around $505 when the markets closed on Wednesday. Other Nasdaq world-beaters like Apple, Amazon, and Alphabet fell as well. The S&P 500 also sank for the fourth day in a row, shedding some 1.5 percent of its composite. That was led by a hard hit to AI spying company Palantir, which has slumped some 9 percent over the past five days of trading, after hitting a record high stock valuation last week. Altogether, the drama represents losses of over $1 trillion in the stock market -- one of the first notable drops in confidence from investors who have so far backed the tech industry's AI plans to the hilt. The question now is whether this is a sign that the AI bubble is starting to burst, as some have been predicting for months, or if some investors are simply cashing in on tech stocks that have experienced unprecedented growth in 2025. (Investors may not be quite sure themselves; the needle on CNN's iconic "Fear & Greed" index is currently hovering right in the middle between the two powerful financial sentiments.) A CNBC analysis, for example, speculates that "investors could just be taking profit and enjoying the summer." One narrative that may be driving some of the chill: a bombshell MIT analysis of AI pilots in corporate settings, which found that 95 percent of enterprise rollouts are currently failing. "The story is spooking people," as an anonymous trader working with a multibillion-dollar tech fund recently told the Financial Times. Some commentators, like UBS head of global equities Ulrike Hoffmann-Burchardi, aren't shy about acknowledging the shaky ground AI stocks have been treading, telling CNN that "investors rotated out of high-momentum tech stocks, reflecting renewed jitters over the sustainability of the AI trade." OpenAI CEO Sam Altman, usually an unflagging automation hype man, seems to concur. Last week, the AI tycoon told reporters that tech stocks were way overhyped on the buzzy new software. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," Altman said. There are also some other issues giving floor brokers heartburn these days, not least of which is the ongoing tug-of-war between Trump and the Federal Reserve. Time will tell whether or not this rout is a temporary setback or the beginning of the end for one of the largest stock bubbles ever recorded. One thing's for sure: this can't go on forever.

OpenAI CEO Sam Altman says an AI bubble is forming

The AI valuations feel irrational. And that's the diagnosis from someone who would know: OpenAI CEO Sam Altman. Altman, the face -- and often the voice -- of the AI boom, just warned that the AI frenzy is spilling past reason into bubble territory. At a recent dinner with reporters in San Francisco -- first reported by The Verge -- he didn't mince words. When Altman was asked whether investors are collectively overhyping the AI space, Altman said, "Yes." He compared the current surge of excitement with the late-1990s dot-com boom, when investors piled into internet startups on the back of one undeniable fact: that the internet was a world-changing technology. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman said. In his view, AI is that kernel: a genuinely transformative advance. The problem is the frenzy of cash chasing anything labeled "AI." "If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited. Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes." That duality -- AI as both a once-in-a-generation breakthrough and a speculative mania -- is Altman's current reality. At the dinner, he criticized the sky-high valuations for startups that barely exist beyond a pitch deck, warning that "someone's gonna get burned." Even as he acknowledged bubble dynamics, Altman emphasized that OpenAI is pressing ahead at full speed. "You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future," he said, betting that the infrastructure being built now will outlast whatever course correction comes later. Capacity constraints are already biting, he said: "We have to make these horrible trade-offs right now. We have better models, and we just can't offer them because we don't have the capacity." It's rare for a CEO at the center of a hype cycle to wave the caution flag, especially one leading the company that helped ignite it with ChatGPT. But Altman's candor matches the contradictions of today's AI economy -- an industry that's both delivering real products used by hundreds of millions and trading at valuations untethered from near-term revenue. Altman isn't the only one drawing parallels between the AI era and the dot-com era. Erik Gordon, a business professor at the University of Michigan and so-called "tech guru," told Business Insider last week that the market reaction to CoreWeave's 33% stock plunge in two days -- a $24 billion loss -- was an early crack. "More investors will suffer than suffered in the dot-com crash," he said, warning that the fallout could be harsher this time. Apollo Global Management's chief economist, Torsten Sløk, has gone further, warning AI stocks today are even more overvalued than those in the late '90s. And earlier this year, Bridgewater founder Ray Dalio told the Financial Times that dangerously high valuations, coupled with elevated interest rates, could "prick the bubble," making today's market look eerily like 1999. "There's a major new technology that certainly will change the world and be successful," Dalio said. "But some people are confusing that with the investments being successful." Wall Street strategists are sounding alarms, too. Bank of America's Michael Hartnett flagged that the S&P 500's price-to-book ratio has hit 5.3, topping dot-com levels, while forward P/Es hover around 1929 territory. Veteran investor Richard Bernstein has been urging clients to avoid chasing "AI FOMO" and instead rotate into dividend payers and defensive sectors such as utilities. Not all the analysis is doom-laden, though. Economists have noted that AI spending is already showing up in GDP: Capital expenditures on chips and data centers are outpacing consumer spending as a driver of growth. That suggests that, even if valuations come down, the hardware and infrastructure being laid today may become the lasting legacy -- similar to the fiber-optic networks that survived the dot-com bust. So it's possible that AI isn't just tech wizardry; it's infrastructure fueling real economy momentum. Altman's conversation with The Verge and others also touched on OpenAI's missteps with its latest release, ChatGPT-5. "I think we totally screwed up some things on the rollout," he said. But he quickly pointed to the upside: API traffic doubled in 48 hours, GPU demand spiked, and ChatGPT "has been hitting a new high of users every day." The scramble to roll back changes underscored, in his view, just how complex it is to update a product that's used by hundreds of millions of people -- overnight. But if GPT-5 was a stumble, Altman quickly pivoted to the bigger picture: ChatGPT's relentless climb. Unsurprisingly, the CEO was bullish about ChatGPT's trajectory, calling it one of the world's dominant platforms already. "Pretty soon, billions of people a day will be talking to ChatGPT," he said. "We're the fifth biggest website in the world right now. I think we're on the clear path to the third." Surpassing Google, he admitted, would be far more difficult: "For ChatGPT to be bigger than Google, that's really hard." Altman showed little hesitation in sketching out the next frontier, one that pushes far beyond search engines and into science fiction. Altman also confirmed OpenAI is exploring brain-computer interfaces to rival Elon Musk's Neuralink. "I think neural interfaces are cool ideas to explore," he said. "I would like to be able to think something and have ChatGPT respond to it." He praised the company's hardware collaboration with Jony Ive and hinted at a new computing paradigm: "You don't get a new computing paradigm very often. There have been only two in the last 50 years. So just let yourself be happy and surprised. It really is worth the wait." But despite being the face of OpenAI, Altman said he doesn't see himself as a natural long-term CEO. "I'm not a naturally well-suited person to be a public company CEO," he said. "Can you imagine me on an earnings call?" Asked whether he expected to remain in the role in a few years, he said, "I mean, maybe an AI is [the CEO] in three years. That's a long time." He may laugh off the prospect of an AI running OpenAI in three years, but he's dead serious about the market's froth. For now, the industry is floating on boundless optimism and bottomless cash. The trouble with balloons, of course, is that they don't stay aloft forever.

Experts say the market's AI anxiety will 'punish those chasing the froth'

Major technology stocks tied to artificial intelligence took a sharp downward turn Tuesday, rattling markets and raising concerns the sector's billion-dollar promises may not be bearing fruit as quickly as hoped. Shares of Palantir Technologies, the data-analytics firm widely viewed as an AI bellwether, plunged more than 9%, its worst tumble since March, after prominent short seller Andrew Left of Citron Research renewed his bearish stance. Other major names felt similar shocks, highlighting underlying investor doubts: Oracle, in the midst of aggressive AI investments and a strategic pivot that included mass layoffs in its cloud division, saw its shares drop nearly 6%. Chipmakers integral to the AI boom struggled as well: Advanced Micro Devices fell 5.4%, Arm Holdings lost 5%, and Nvidia, the sector's dominant force, slid 3.5%. SoftBank, whose outsized bets on AI have defined its recent strategy, dropped more than 7% -- amplifying concerns about a broader tech correction and underscoring Wall Street's uneasy relationship with the so-called next big thing. OpenAI CEO Sam Altman even admitted AI is in a bubble. The abrupt sell-off echoes broader skepticism about the sustainability of sky-high valuations seen in AI-focused companies. But experts say that while investors are right to be cautious, the underlying technology isn't going away -- and this is a short-term drop during a long-term transformation. Behind the market jitters, a recent report from MIT said approximately 95% of company generative AI pilot programs resulted in "little to no measurable impact" on revenue or profits. While a handful of startups have thrived, the vast majority of corporate efforts have stalled, caught in flawed enterprise integrations and learning gaps. The research, encompassing 150 executive interviews, 350 employee surveys, and an analysis of 300 public AI deployments, paints a sobering picture: Outside exceptional cases, generative AI projects have yet to justify the vast spending across the sector. MIT's lead author, Aditya Challapally, told Fortune failure may lie less in the underlying tools than in enterprise execution, citing issues around workflow adaptation and resource allocation. In contrast, nimble startups have rapidly scaled revenues -- validating the potential of the technology when well integrated, but also highlighting a gulf between hype and reality for larger companies. "There's no doubt that when MIT reports a 95% failure rate in AI pilot programs, it's alarming," Mike Sinoway, CEO of AI-powered search software company Lucidworks, told Fortune. "But the problem has less to do with the underlying technology and more with how companies are approaching it." "In our own research, polling over 1,600 AI practitioners and leaders and validating this with bot analysis, we found 65% of teams are rolling out AI without the fundamental tech infrastructure in place," he said. "Trying to build cutting-edge applications atop weak foundations is like building an F1 car on a go-kart engine -- you simply won't get results. So while a 95% failure rate might seem like a sign of a bubble, once organizations focus more on what AI actually needs to succeed, we'll begin to see the traction everyone is expecting." Chase Feiger, CEO of Ostro, agreed current volatility is part of a typical tech cycle. "Talk of an AI bubble isn't new," Feiger told Fortune. "Every major tech shift goes through a stage where hype runs ahead of business fundamentals," he said. "Some companies are burning money on inference costs, offering 'all-you-can-eat' models that cost thousands to run but bring in only hundreds in revenue -- a pattern reminiscent of Uber's early years. That overinflation explains market caution, but the underlying technology isn't overhyped. In health care, for example, AI is transforming drug development, patient care, and physician decision-making. "The correction will come. But over the long haul, the winners will be those who prove AI delivers durable value in complex, high-stakes environments," Feiger added. Harvard professor Christina Inge told Fortune the duality at work is nothing new. "Investors are right to be cautious," she said. "Not every company claiming to be 'AI-driven' is creating real value; a lot of it is smoke and mirrors, with some tools amounting to incremental improvements on non-AI tech. Correction is inevitable, as history shows. "But the technology isn't going away. AI is already making a difference in health care, marketing, logistics, and finance. And we're only scratching the surface. In the long run, I expect the impact of AI to rival the Industrial Revolution. There's a lot of froth in the market right now, but the bigger story is just beginning. In other words: short-term bubble, long-term transformation." That view is echoed by Shay Boloor, chief market strategist at Futurum Equities. "What we're seeing isn't a bubble, but the foundation of a new economy," Boloor told Fortune. "There will be volatility -- inevitable with a sector this hot -- but the fundamental reality is every industry will be transformed by AI. Just look at Microsoft and Meta this quarter: Azure hit its biggest revenue numbers ever, Microsoft Cloud crossed $46 billion, and Meta monetized not just attention but intelligence, with 22% revenue growth and 38% profit growth, while spending $70 billion in CapEx. The demand is not hypothetical -- it's scaling now. "We're not at the peak of AI. We're at an inflection point." Siamak Freydoonnejad, co-founder of Sprites AI, which makes an AI-powered marketing agent, says, however, deciding whether or not we're in an AI bubble "misses the point" entirely. "Stock prices may have outpaced fundamentals, but inside enterprises, AI is already infrastructure," Freydoonejad told Fortune. "No one who's seen campaign launch speed improve by 70% is going back to the old way," he said. "Some vendors did slap 'AI' on legacy products to cash in, but those valuations will be corrected -- and deservedly so. What matters is which firms are using AI not as a shallow trend but as the basis for their entire product. Real efficiency gains are showing up for companies embedding AI deeply in their workflows. The market is about to sort out those with substantive results from those selling only promises." "Big Tech just raised AI spending guidance to $360+ billion for 2025, up sharply from previous estimates. I watch those numbers more closely than day-to-day share price changes," he said. "This isn't a rejection of AI, it's a market becoming more selective," Kouhlani continued. "The crash is separating real AI revenues from companies that only have AI PowerPoints. We're not in another dot-com bust. The infrastructure is being built now, and expectations are adjusting faster than the technology itself." Usha Haley, the W. Frank Barton Distinguished Chair in International Business and professor of management at the Barton School of Business at Wichita State University, argues that cycles of bubbles and corrections are intrinsic to tech revolutions. "Historically, every breakthrough technology comes with bubbles," Haley told Fortune. "AI is already delivering productivity gains, even as it erodes some jobs. We'll see some correction and consolidation, but not a collapse. The strongest players will emerge into a changed landscape. Regulation and stochastic shocks could alter outcomes, but competitive environments -- not monopolies -- will point to future leaders." Fabian Stephany, a lecturer at the University of Oxford, sees evidence for both sides: "To some extent, yes, there is an AI bubble. But long-term fundamentals are exceptionally strong," he told Fortune. "Many firms use AI for marketing more than substance, which has inflated valuations. Yet, stock-market gains this year are overwhelmingly linked to real advances in AI at companies like Nvidia, Meta, Microsoft, and Broadcom. Nvidia alone accounts for 26% of the S&P's advance, underscoring real market transformation. David Brudenell, executive director at Decidr, which builds an AI-powered operating system for businesses to automate workflows, told Fortune that "correction is necessary" as it "separates speculation from structural value." And David Russell, global head of market strategy at TradeStation, agreed "oullbacks are normal after rallies stall." "Major players like Palantir and Microsoft failed to hold breakouts after strong earnings. That's a sign the good news may be priced in," Russell told Fortune. "Markets move ahead of fundamentals, but excessive prices punish those chasing the froth. In the weeks ahead, sentiment could shift to other macro factors." The expert consensus is clear: While stocks have pulled back, the fundamentals behind AI remain strong. Most believe the recent rout is an overdue market sorting -- separating hype from reality, speculation from enduring value. Even MIT's cautious findings are seen as a spur rather than a death knell. Now, all eyes will turn to Nvidia, which reports quarterly earnings next week. But broadly speaking, what the market isn't experiencing isn't a sign of crisis, but a marker of growing pains.

Wall Street isn't worried about an AI bubble. Sam Altman is.

Speaking to reporters over dinner late last week, Altman drew a parallel between today's AI frenzy and the 1990s dot-com bubble, when internet company valuations spiked dramatically before crashing. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman said, in comments reported by The Verge. "If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited." He noted some startup valuations for companies raising hundreds of millions of dollars with only a staff of three were "insane." "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," he said. "Is AI the most important thing to happen in a very long time? My opinion is also yes." Altman warned that some investors are likely to get "very burnt" as some of the hype unwinds, but maintained that the long-term value created by artificial intelligence will outweigh short-term losses. He also repeated the word "bubble" three times in 15 seconds, joking that the comments were likely to become a headline. Wedbush's Dan Ives, however, was undeterred by Altman's slightly tepid tone. He told Fortune that the "AI Revolution will fuel a tech bull market for the next 2-3 years at least." "This is trillions being spent in the buildout of this 4th Industrial Revolution. There could be forth in certain areas of the private market for AI vendors, but ultimately, we do not see this as a bubble. This is a 1996 Moment with a lot more room to go, not a 1999 Moment in our view," he said in an email. Richard Saperstein, chief investment officer at Treasury Partners, also shrugged off concerns, noting that large-cap technology stocks remain the market's driving force. In a Monday note reported by Barron's, he wrote that big tech companies "have led the market higher and will continue to dominate market performance," citing expectations for continued earnings growth, strong reinvestment of cash flows, and the expansion of their global reach. Saperstein advised investors to remain fully invested in U.S. equities, with a particular focus on large-cap technology names. He pointed to structural tailwinds, including deregulation, onshoring, and favorable treatment of capital expenditures, that he believes will support both corporate performance and broader economic growth in the years ahead. Investors have had a reason to cheer in recent weeks, as major tech companies reported earnings that exceeded expectations. Microsoft, Alphabet, and Meta all posted strong growth and showed no signs of pulling back on AI. The largest technology companies, including Microsoft, Amazon, Alphabet, and Meta, have all increased their capital expenditure forecasts to meet rising demand for artificial intelligence. Altman's OpenAI is no different. "You should expect OpenAI to spend trillions of dollars on datacenter construction in the not very distant future," Altman said, in comments reported by The Verge. "And you should expect a bunch of economists wringing their hands, saying, 'This is so crazy, it's so reckless,' and we'll just be like, 'You know what? Let us do our thing.'" As AI spending soars, there has been simmering concern that investment in AI may be outpacing sustainable growth. Industry figures, including Alibaba co-founder Joe Tsai and Bridgewater Associates founder Ray Dalio, have all voiced concerns about the trend. Earlier this year, Dalio warned that the current cycle on Wall Street appeared to be "very similar" to that seen before the dotcom bust in 1998 and 1999. "There's a major new technology that certainly will change the world and be successful. But some people are confusing that with the investments being successful," Dalio told The Financial Times. In a report last month, Apollo Global Management chief economist Torsten Slok went further, arguing that the current AI boom may surpass the internet bubble of the 1990s. He noted that the ten largest companies in the S&P 500 are now more overvalued relative to fundamentals than during the peak of the dot-com era.

US tech stocks slide after Altman warns on AI future and MIT study casts doubt on the hype

Investors' long-running enthusiasm for artificial intelligence showed signs of faltering late Tuesday and early Wednesday morning as tech stocks tumbled. Nasdaq 100 futures were off 0.2% this morning, premarket. Nvidia, fresh off becoming the world's first $4 trillion company, sank 3.5%, while Palantir slid nearly 10%. The sell-off appeared to be sparked in part by an MIT report that claimed 95% of companies investing in generative AI are seeing no returns, and was potentially deepened by earlier comments from OpenAI's Sam Altman suggesting investors may be caught in an AI bubble. Late last week, Altman drew a parallel between today's AI frenzy and the 1990s dotcom bubble, when internet company valuations spiked dramatically before crashing. And while the MIT study attributed failures to corporate "learning gaps" and flawed integration rather than actual AI model quality, the market reaction highlights growing concerns about AI's commercial viability. The Nasdaq logged its steepest drop since August, and the rout quickly spread overseas. Korea's SK Hynix, one of Nvidia's key suppliers, lost 2.9%, while chip giant TSMC slipped 4.2%. SoftBank, long bullish on AI, cratered more than 7%. However, Alibaba and Tencent barely dipped, and China's chipmaking champion SMIC even popped 3%. "Tech stocks were under pressure yesterday, led by AI poster child stocks Palantir and Nvidia as investors worry the tech rally is due for a pullback/correction with the constant valuation arguments front and center," Wedbush's Dan Ives wrote in a note on Tuesday. "We are still in the early days of the AI Revolution as the use cases are just starting to massively expand as more companies recognize the value creation being driven by a handful of tech companies led by the Godfather of AI Jensen and Nvidia." Concerns that investment in AI is racing ahead of sustainable growth are not new. High-profile figures, including Alibaba cofounder Joe Tsai and Bridgewater Associates founder Ray Dalio, have cautioned against the pace of the boom. Dalio has also likened today's Wall Street cycle to the run-up to the dotcom crash of the late 1990s. "There's a major new technology that certainly will change the world and be successful. But some people are confusing that with the investments being successful," he told the Financial Times earlier this year. Others see the risks as even greater. Apollo Global Management chief economist Torsten Slok argued last month that the AI surge could eclipse the internet bubble of the 1990s, pointing out that the 10 largest companies in the S&P 500 are now more overvalued relative to fundamentals than they were at the height of the dotcom era.

US tech stocks tumble on AI bubble fears

US stocks have plunged for a second day amid fears that an AI-powered stock market rally could be about to collapse. The tech-heavy Nasdaq fell by 1.8pc in early trading on Wednesday, leaving the index down more than 7pc so far this week in the worst sell-off since April. Elsewhere on Wall Street, the S&P 500 also fell by 1pc as markets opened. The drop-off has been fuelled by concerns that AI companies are overvalued, with some claiming they have little to show for the billions of pounds of investment that have been ploughed into companies such as OpenAI. Shares in Nvidia, the world's largest company with a $4 trillion valuation, fell by 3.3pc in early trading on Wednesday, before recovering slightly. The technology giant, which makes the chips that power vast AI data centres, is down 6pc so far this week. Shares in Palantir, the US data business and defence contractor, also sank by 6pc on Wednesday and are down by around a fifth over the past week. Shares in Arm, the UK chipmaker, dropped by 4.6pc. It comes after a report from researchers at MIT suggested that 95pc of corporate AI projects are so far generating "zero return" for businesses. The latest fall also coincides with market jitters ahead of Jerome Powell, chairman of the Federal Reserve, delivering a speech to central bankers at Jackson Hole on Friday.

OpenAI's Sam Altman sees AI bubble forming as industry spending surges

Sam Altman, CEO of OpenAI, in Washington, D.C., on July 22.Andrew Harnik / Getty Images file OpenAI CEO Sam Altman thinks the artificial intelligence market is in a bubble, according to a report from The Verge published Friday. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman told a small group of reporters last week. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes," he was quoted as saying. Altman appeared to compare this dynamic to the infamous dot-com bubble, a stock market crash centered on internet-based companies that led to massive investor enthusiasm during the late 1990s. Between March 2000 and October 2002, the Nasdaq lost nearly 80% of its value after many of these companies failed to generate revenue or profits. His comments add to growing concern among experts and analysts that investment in AI is moving too fast. Alibaba co-founder Joe Tsai, Bridgewater Associates' Ray Dalio and Apollo Global Management chief economist Torsten Slok have all raised similar warnings. Last month, Slok stated in a report that he believed the AI bubble of today was, in fact, bigger than the internet bubble, with the top 10 companies in the S&P 500 more overvalued than they were in the 1990s. In a Monday email to CNBC, Ray Wang, research director for semiconductors, supply chain and emerging technology at Futurum Group, said that he thought Altman's comments carry some validity, but that the risks are company-dependent. "From the perspective of broader investment in AI and semiconductors... I don't see it as a bubble. The fundamentals across the supply chain remain strong, and the long-term trajectory of the AI trend supports continued investment," he said. However, he added that there is an increasing amount of speculative capital chasing companies with weaker fundamentals and only perceived potential, which could create pockets of overvaluation. Many fears of an AI bubble had hit a fever pitch at the start of this year when Chinese start-up DeepSeek released a competitive reasoning model. The company claimed one version of its advanced large language models had been trained for under $6 million, a fraction of the billions being spent by U.S. AI market leaders like OpenAI, though these claims were also been met with some skepticism. Earlier this month, Altman told CNBC that OpenAI's annual recurring revenue is on track to pass $20 billion this year, but that despite that, it remains unprofitable. The release of OpenAI's latest GPT-5 AI model earlier this month had also been rocky, with some critics complaining that it had a less intuitive feel. This resulted in the company restoring access to legacy GPT-4 models for paying customers. Following the release of the model, Altman has also signaled more caution about some of the AI industry's more bullish predictions. Speaking to CNBC, he said that he thought the term artificial general intelligence, or "AGI," is losing relevance, when asked whether the GPT-5 model moves the world any closer to achieving AGI. AGI refers to the concept of a form of artificial intelligence that can perform any intellectual task that a human can -- something that OpenAI has been working towards for years and that Altman previously said could be achieved in the "reasonably close-ish future.'' Regardless, faith in OpenAI from investors has remained strong this year. CNBC confirmed Friday that the company was preparing to sell around $6 billion in stock as part of a secondary sale that would value it at roughly $500 billion. In March, it had announced a $40 billion funding round at a $300 billion valuation, by far the largest amount ever raised by a private tech company. In The Verge article on Friday, the OpenAI CEO also discussed OpenAI's expansion into consumer hardware, brain-computer interfaces and social media. Altman also said that he expects OpenAI to spend trillions of dollars on its data center buildout in the "not very distant future," and signaled that the company would be interested in buying Chrome if the U.S. government were to force Google to sell it. Asked if he would be CEO of OpenAI in a few years, he was quoted as saying, "I mean, maybe an AI is in three years. That's a long time."

'Someone is going to lose a phenomenal amount of money' says OpenAI CEO Sam Altman about unwise AI investment. 'When bubbles happen, smart people get overexcited about a kernel of truth'

OpenAI CEO Sam Altman spoke to assembled reporters at a dinner in San Francisco late last week on the topic of, you guessed it, AI, the applications of AI, and the vast sums of money moving behind the scenes to fund it. Despite being one of the most vocal advocates of the tech, Altman had some words of caution for investors jumping on the artificial intelligence train. According to The Verge, Altman said it was "insane" that AI startups consisting of "three people and an idea" are receiving huge amounts of funding off the back of incredibly high company valuations, describing it as "not rational behaviour." "Someone is going to lose a phenomenal amount of money. We don't know who, and a lot of people are going to make a phenomenal amount of money," said Altman. "When bubbles happen, smart people get overexcited about a kernel of truth. If you look at most of the bubbles in history, like the tech bubble, there was a real thing." said Altman, referencing the infamous dot-com bubble of the late 1990s. "Tech was really important. The internet was a really big deal. People got overexcited." That being said, Altman stopped short of calling investment in AI overall a bad idea for the economy in general: "My personal belief, although I may turn out to be wrong, is that, on the whole, this would be a huge net win." At the same dinner, Altman confirmed that OpenAI would still be spending vast amounts of money (partially provided, presumably, by the likes of Softbank and the Dragoneer Investment Group in OpenAI's latest $8.3 billion funding round) to keep the company at the top of the AI financial leaderbooks. "You should expect OpenAI to spend trillions of dollars on data center construction in the not very distant future," Altman said. "You should expect a bunch of economists to wring their hands." Well, it certainly appears to cost a whole lot of moolah just to keep the good ship OpenAI afloat. The company has raised staggering sums of cash over the past decade to develop and run its various AI implementations, the most famous of which being ChatGPT. Reports last year indicated that OpenAI had spent $8.5 billion on LLM training and staffing for its generative AI efforts, while other analysts have predicted it costs $700,000 a day to run ChatGPT alone. The Information recently projected that OpenAI would be burning through $20 billion in cash flow by 2027, with the company said to be hopeful that investors like Softbank would stump up another $30 to $40 billion to continue funding its operations. Still, those spending figures don't appear to be in the trillions yet, although that estimated sum is perhaps of little surprise to those of us that keep an eye on AI data center expansion. Given that Altman's rival, Elon Musk, has been booting up and expanding xAI's Colossus supercomputer with incredible speed, and with the news that Meta is expanding its data center operations at such a rate it's currently having to house a significant portion of its racks in nearby tents, OpenAI will feel the need to keep up -- and to do that it needs to spend (and raise) huge amounts of cash over the next few years. One would assume that Altman is confident enough in his company's efforts to place its investors on the "going to make phenomenal sums of money" side of things, but his comments should perhaps serve as a warning to those looking to jump in with both feet without correctly judging the landing. Someone has to lose in the great AI race, I suppose. And as to which companies survive, and which come to a sticky end? That remains very much an open question for now.

Markets spooked as MIT report finds 95pc of business see no Gen AI ROI

A negative GenAI report from MIT's NANDA, hot on the heels of Sam Altman's 'bubble' comments, led to a drop in big tech shares yesterday. One does not have to be a genius to surmise that the current hype around Generative AI (Gen AI) might be a little over the top, but a report this week from MIT's NANDA (Networked Agents and Decentralized AI), along with measured comments from OpenAI's Sam Altman of all people, led yesterday to a significant drop in tech stocks in the US, followed by a slump in Asia this morning (20 August). Nvidia shares were down 3.5pc yesterday, while Peter Thiel's Palantir fell 9.4pc, according to the Financial Times, who said that overall the tech-heavy Nasdaq Composite was down 1.4pc in a day. As is often the case, the Asian markets followed suit this morning with Japan's Nikkei 225 index down 1.8pc The NANDA report found that 95pc of US businesses had seen little or no return on investment in Gen AI, notwithstanding investment of nearly $40bn, and that of the 5pc of those who were deploying the tech successfully, the majority were in telecoms, tech and media. Open AI's Altman had said just a few days back that some investors were going to get "very burnt" in the GenAI boom. It was at a dinner with US reporters that Altman made some pretty dire warnings, according to CNBC. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," CNBC reported Altman as telling journalists. "Is AI the most important thing to happen in a very long time? My opinion is also yes." Altman said OpenAI would continue to spend trillions on AI and on datacentre construction, but he also mentioned the word "bubble" three times, sparking some concern among investors, compounded by the new NANDA report. The last time the Nasdaq saw a comparable slump was back in January when DeepSeek spooked the market with a powerful Gen AI offering that required a fraction of the compute power of its US equivalents, calling into question the sheer level of investment by the big tech companies. It comes at a time when a new round of investment in OpenAI, if completed, would take its value beyond that of SpaceX, currently the most valuable privately-held company in the world - that despite the fact that SpaceX has billions in Government contracts, and Space hardware that beats anything at NASA. What could possibly go wrong? Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

Sam Altman Admits the AI Bubble Is Here

In an interview with reporters from multiple publications on Thursday night, OpenAI CEO Sam Altman said he believes the AI sector has entered the territory of a financial bubble. The AI sector has exploded since 2022, largely based on the growth of Altman's company and its flagship product, ChatGPT. Economists and tech critics have argued recently that the billions of dollars in venture investment in AI companies, and the crush of startups jumping on the AI bandwagon, has been reminiscent of the dot-com bubble and crash of the late 1990s. Altman made the same analogy in his interview with reporters. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman said, according to The Verge. "If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited." He added that "someone is going to lose a phenomenal amount of money. We don't know who, and a lot of people are going to make a phenomenal amount of money." Earlier this week, OpenAI released its newest model, GPT-5, to some negative reviews. The CEO had initially promised the model would offer "PhD-level intelligence" in most tasks. But the issue for many people came down to its tone: Users claimed GPT-5 has a terser and colder temperament than its predecessor, GPT-4o. Altman's admission that AI is over-valued and in a bubble is significant. The CEO has served as one of the industry's biggest boosters since the launch of ChatGPT in 2022. But Altman had hinted that the writing was on the wall last week, when he told CNBC that the term Artificial General Intelligence (AGI) -- a milestone for researchers that involves AI that's equal to or better than humans at most tasks -- isn't a "super useful term." AGI, he said, is an over-used term that has lost its meaning. "I think the point of all of this is it doesn't really matter and it's just this continuing exponential of model capability that we'll rely on for more and more things," he told CNBC. Recent reports indicate OpenAI is valued at $300 billion and approaching $20 billion in annual recurring revenue this year. Despite those prolific numbers, the company is yet to turn a profit, the CEO recently confirmed to CNBC. One factor is that the computational power required to run Large Language Models built by OpenAI and its competitors is notoriously expensive. Warnings of an AI bubble bursting are not new. In 2023, the venture capitalist Jason Corsello, CEO and general partner of Acadian Ventures, told Inc: "This area of A.I. is somewhat overhyped. It's over-invested, it's overvalued. When you're seeing seed-stage companies raise between $100 million and $150 million with nothing more than a pitch deck, that's a bit concerning." OpenAI, for its part, is currently seeking a $500 billion valuation through a tender offer for current and former employees. The preferred-rate deadline for the 2025 Inc. Best in Business Awards is this Friday, August 15, at 11:59 p.m. PT. Apply now.

OpenAI CEO Sam Altman Thinks We're in an AI Bubble Because Investors Are 'Overexcited' About Artificial Intelligence

He said that investors are now "overexcited" about AI, with startup valuations reaching "insane" heights. OpenAI CEO Sam Altman thinks that the billions of dollars invested in AI now could create a bubble similar to the dot-com crash of the early 2000s. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," Altman said at a recent dinner, per The Verge. "Smart people get overexcited about a kernel of truth." The data shows that AI startups are the focus of more funding now than ever. According to PitchBook, AI startups raised $104.3 billion in the U.S. in the first half of 2025, which was almost as much as the total amount raised by all startups in 2024. PitchBook found that almost two in three U.S. venture funding dollars went to AI startups this year, higher than 49% of funds last year. Related: OpenAI CEO Sam Altman Says Older Workers Need to Embrace AI -- or Face Losing Their Jobs Altman noted that AI startup valuations have now reached "insane" heights, as startups raise hundreds of millions of dollars with just an idea, signaling a bubble, per CNBC. OpenAI is an example of a company that has raised billions of dollars to fuel its AI efforts. In March, the startup raised $40 billion in the largest private tech funding round ever, at a $300 billion valuation. Altman compared the AI bubble to "the tech bubble" or the dot-com crash that occurred between 2000 and 2002 when the Nasdaq lost nearly 80% of its value. The dot-com crash was caused by investors overvaluing Internet-based tech companies that lacked sustainable business models and had little to no profits. When the dot-com bubble burst, investors incurred considerable financial losses, and many tech companies went out of business. Related: OpenAI Is Creating AI to Do 'All the Things That Software Engineers Hate to Do' Even if an influx of funding is contributing to an AI bubble, Altman says that OpenAI still intends to spend heavily, up to "trillions of dollars on datacenter construction in the not very distant future," according to CNBC. The company is betting on growing demand to bolster spending. OpenAI's flagship product, ChatGPT, now reaches 700 million weekly users, a fourfold increase from the same time last year. Altman said at the dinner that ChatGPT is "the fifth biggest website in the world right now" and is angling to move up to the third slot by beating out Facebook and Instagram. Google and YouTube are the two top-visited sites in the world as of January. It's also releasing new, updated versions of its AI. Earlier this month, OpenAI released its latest AI model, GPT-5, which is more efficient and boasts improvements in coding, math, and other subjects compared to previous models. Altman says that AI is "the most important thing to happen in a very long time."

Sam Altman Warns Investors That 'Someone's Gonna Get Burned': Report

He reportedly added that AI will be a "huge net win for the economy" OpenAI CEO Sam Altman reportedly admitted last week that the ongoing excitement around the generative artificial intelligence (AI) technology resembles the 1990s dot-com bubble. As per the report, Altman made the comments during an interview with a group of journalists, and highlighted that investors funding AI startups at high valuations could get "burned" in the future. This is the first time the OpenAI CEO has openly acknowledged that the AI market might be filled with over-inflated companies that might not grow as per their suggested valuation. Sam Altman Says Investors Funding Startups With "Three People and an idea" Are "Insane" Altman was asked during the interview if he thinks investors are overexcited about AI, The Verge reported. Answering with a yes, the CEO of one of the most influential AI firms in the world reportedly compared the ongoing rapid rise of AI to the dot-com bubble in the 1990s. To provide more context to the comparison, in the late 1990s, Internet companies ("dot-coms") saw massive investor hype. Many of these companies raised a large sum at sky-high valuations due to the belief that the Internet would change the way the world works. While that did happen, not every company was able to sustain and grow like Amazon or Google. In the early 2000s, the bubble burst after investors realised that the multitude of these companies were not making a profit or had a viable business model. As a result, the Nasdaq Composite, a US stock market index dominated by technology companies, lost nearly 75 percent of its value between March 2000 and October 2002. "When bubbles happen, smart people get overexcited about a kernel of truth. If you look at most of the bubbles in history, such as the tech bubble, there was a real phenomenon. Tech was really important. The internet was a really big deal. People got overexcited," The Verge quoted Altman as saying. The OpenAI CEO reportedly also took a dig at AI startups with a small number of people and no market-ready products, raising millions in funding rounds. He reportedly called the trend of such firms receiving investments "insane." Interestingly, OpenAI Co-Founder Ilya Sutskever's Safe Superintelligence and former OpenAI Chief Technology Officer Mira Murati's Thinking Machines Lab have both raised billions of dollars in funding despite remaining in stealth mode. "That's not rational behaviour. Someone's gonna get burned there, I think. Someone is going to lose a phenomenal amount of money." Altman was quoted as saying. The CEO also acknowledged that the AI space was not fated for a dark fall, and highlighted that investors who understand the technology also stand to make a "phenomenal amount of money." Despite the investment risks, he reportedly said that the technology will turn out to be a "net win for the economy."

Cracks in the AI hype? Warning signs suggest the Bubble could soon explode

The AI boom is showing warning signs as many business investments give little or no return. Stocks like Nvidia and Palantir fell after an MIT report highlighted failing AI projects. Experts and investors worry about a possible tech bubble, while big companies like Meta and OpenAI rethink AI strategies, making the future of AI growth uncertain. In March 2000, Barron's asked, "When will the internet bubble burst?" warning the pop could happen before year-end. On that same day, a top tech company saw its share price drop 60pc, and many others collapsed, wiping out trillions. Now, some Wall Street experts worry the same "unpleasant popping sound" may hit the AI boom. On Tuesday, tech stocks fell sharply after a report from MIT said most AI investments give "zero return" for businesses. MIT academics wrote: "Despite $30-40bn in enterprise investment into Generative AI, 95pc of organisations are getting zero return". Nvidia shares dropped 3.5pc and Palantir fell 9pc after the report. MIT's findings could be the pin that pops the tech stock bubble, which has increased US stock values by trillions. Since ChatGPT's launch in 2022, Silicon Valley has claimed AI chatbots will transform the economy, promising cost savings and productivity gains. MIT's report suggests the AI revolution has stalled, despite big investments, as reported by The Telegraph. MIT surveyed 150 business leaders and 350 employees, finding only 5pc of AI pilots generate millions in value; the rest show no measurable profit impact. Marko Kolanovic, former JP Morgan head of research, commented: "Sounds about right for a bubble". MIT found half of AI projects fail, 80pc of companies explored AI, but only 40pc actually deployed it. Only 20pc of enterprise-grade AI systems reached the pilot stage and just 5pc reached production. ALSO READ: Google Pixel 10 series and Pixel 10 Pro fold launched with AI features and new designs Many employees prefer using consumer AI products like ChatGPT on their own rather than corporate AI tools. The report emphasized: "AI is already transforming work, just not through official channels". Despite benefiting from AI, OpenAI CEO Sam Altman warned investors: "Are investors overexcited? My opinion is yes... some people stand to lose a phenomenal amount of money". Investors worry about SoftBank, which invested billions in OpenAI; its shares fell 7pc on Tuesday. OpenAI recently launched ChatGPT-5, which underwhelmed users; improvements were seen as small or incremental. Morgan Stanley predicts $3tn will be spent on data centres over three years, mostly fueled by debt, to support AI growth, as stated by The Telegraph. Morgan Stanley also projects AI could add $16tn to the S&P 500 through 40pc salary savings, though MIT's report suggests this may be unrealistic. Meta announced a reorganization of its AI division, including staff reductions, showing even big AI believers are cautious. Mark Zuckerberg has spent hundreds of millions to hire AI engineers at Meta, as per the New York Times report. Despite the sell-off, the market hasn't collapsed completely; some analysts see it as just a speed bump. Dan Ives, tech analyst at Wedbush Securities, said skeptics of the tech rally will be proven wrong again. Nvidia will report results next week, potentially showing the true state of AI investments in major companies. Ives believes the tech bull cycle will continue for another 2-3 years, but many are still listening for the ominous pop, as mentioned by The Telegraph. Q1. Is the AI boom at risk of a market crash? Yes, experts warn that most AI investments show zero return, which could trigger a tech stock bubble burst. Q2. Are big companies slowing down their AI projects? Yes, many firms like Meta and SoftBank are cautious, with AI projects failing or being scaled back.

OpenAI's Sam Altman willing to pour trillions of dollars into AI infrastructure - The Economic Times

OpenAI chief executive Sam Altman said the company is prepared to invest trillions of dollars over time in artificial intelligence (AI) infrastructure if it can design a new way to finance such massive spending. Altman told Bloomberg that OpenAI aims to build large-scale data centers in the near future. While some economists may see the move as "risky" or "reckless," he insisted that nothing would deter the company from pursuing the plan. "I suspect we can design a very interesting new kind of financial instrument for finance and compute that the world has not yet figured out," Altman told Bloomberg. "We're working on it." Stargate delays There have been reports about Stargate, the joint initiative between SoftBank and OpenAI, being hit by delays. The project, backed by top tech companies, was announced in January with plans to deploy $100 billion immediately and scale up to $500 billion over four years to build AI infrastructure in the US. However, fundraising has yet to begin. US President Donald Trump highlighted billions of dollars of private-sector investment flowing into AI infrastructure. Around the same time, OpenAI was close to finalising a $40 billion funding round led by SoftBank, with backing from Magnetar Capital, Coatue Management, Founders Fund, and Altimeter Capital. Also Read: ETtech Explainer: Behind Trump's $500-billion 'Stargate' bid for AI supremacy 'No regrets' on AI investments Altman underscored the importance of pushing ahead with AI, saying investments in advanced technology will have "lasting impacts on the business world and society." He added that society is unlikely to regret pouring money into the sector. "It's very rational for us to keep investing right now," he said. Still, he cautioned that startup valuations remain "insane" and fuelled by "irrational behavior," predicting inevitable losses for some investors.

Tech stocks tumble as investors flee -- is the AI bubble finally about to burst?

Stock market AI bubble 2025: Tech stocks experienced a downturn, sparking concerns about a cooling AI market obsession. Big tech companies like Amazon, Apple, and Nvidia faced declines, influenced by a study revealing limited AI returns for most companies. OpenAI CEO Sam Altman's warning of an AI bubble further fueled market caution. Stock market AI bubble 2025: The glow of the AI boom dimmed further on Wednesday as tech stocks slid for a second straight day, raising concerns about whether the market's AI obsession is now starting to cool off, as per a report. Investors appeared to be backing away from some of the biggest winners of the year, according to Yahoo Finance. Amazon and Apple dropped almost 2%, while Alphabet fell about 1%. Nvidia, one of the most talked-about stocks of the AI wave, closed slightly down after a steeper drop the day before, as per the Yahoo Finance report. Advanced Micro Devices and Broadcom slipped as well, and Micron tumbled nearly 4%, according to the report. Even companies built directly on AI infrastructure weren't spared, like CoreWeave, which rents computing power to tech giants like Microsoft and Meta, dropped about 1%, bringing its five-day losses to more than 20%, as reported by Yahoo Finance. Palantir, a defense tech firm that had been riding high on AI momentum, also declined for the day, extending its recent losing streak, according to the report. ALSO READ: Putin's midnight ultimatum: Trump forced into 15-minute deadline for late-night chat The growing caution around AI-linked stocks seems to stem from two major blows this week, as per the Yahoo Finance report. First was a report from researchers at Massachusetts Institute of Technology's Project NANDA, which found that 95% of the companies it studied saw no real return from AI so far, according to the Yahoo Finance report. ALSO READ: Shocking twist: Computer Science grads face one of the highest unemployment rates today Then came a surprising commentary from one of AI's most prominent voices, OpenAI CEO Sam Altman, just after the ChatGPT-maker finished out its latest multibillion-dollar funding round, as per the report. He said that he believes there's an AI bubble, as reported by Yahoo Finance. Altman pointed out that, "When bubbles happen, smart people get overexcited about a kernel of truth," adding, "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes," as quoted in the report. ALSO READ: Iran flexes firepower: Massive missile drill aims warning at US and Israel after June war While DA Davidson analyst Gil Luria compared the changing market sentiment to a pendulum, saying, "This is really just the pendulum swinging back," as quoted by Yahoo Finance. Luria highlighted that, "The AI trade was getting so expensive that all it took was some comment from Sam Altman to make the investment community take some profits off the table," and added that "the reality is that AI still has limited applications" beyond consumers talking to AI chatbots and using the tools as a search engine, as reported by Yahoo Finance. ALSO READ: Apple Watch SE 3 leaks spill major upgrades -- and fans can't stop buzzing about what's coming However, some AI bulls, like Wedbush analyst Dan Ives, still have faith in the technology's ability to fuel markets to new highs, Ives said, "We are still in the early days of the AI Revolution as the use cases are just starting to massively expand as more companies recognize the value creation being driven by a handful of tech companies led by the Godfather of AI [Nvidia CEO] Jensen [Huang] and Nvidia," as quoted in the report. Ives also emphasised that "the tech bull cycle will be well intact at least for another 2-3 years given the trillions being spent on AI," as quoted in the report. ALSO READ: Move over quiet quitting -- as AI looms 'quiet cracking' is costing $438 billion and wrecking workers' health Which tech companies are being hit the hardest? Amazon, Apple, Alphabet, Nvidia, AMD, Broadcom, Micron, CoreWeave, and Palantir all saw declines recently, as per the Yahoo Finance report. What did Sam Altman say about AI? Sam Altman said he believes the market is currently in an AI bubble and that investors may be "overexcited" about the technology's potential, as per the Yahoo Finance report.

Sam Altman Says OpenAI Has To 'Go Public' As He Expects AI Firm To Spend 'Trillions,' Drawing 1990s Dot-Com Bubble Parallels - SoftBank Group (OTC:SFTBF), Oracle (NYSE:ORCL)

On Thursday, Sam Altman said people should "expect OpenAI to spend trillions of dollars" building infrastructure to power artificial intelligence, while also drawing parallels between today's AI investment and the late 1990s dot-com bubble. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get StartedEconomist Will Raise Concerns, But Altman Says 'Let Us Do Our Thing' Altman told reporters that OpenAI will need significant capital to sustain the development of advanced AI, reported Bloomberg. "And you should expect a bunch of economists to wring their hands and say, 'This is so crazy, it's so reckless, and whatever," he said, adding, "And we'll just be like, 'You know what? Let us do our thing.'" The OpenAI CEO also stated that the AI startup is exploring new ways to fund this effort. "I suspect we can design a very interesting new kind of financial instrument for finance and compute that the world has not yet figured it out," he stated, adding, "We're working on it." See Also: Microsoft Is Betting Big On A Startup That Injects Human And Animal Waste Into Rocks To Offset 14.9M Tons Of Emissions OpenAI CEO Highlights The Massive Investment In AI Development While speaking with the reporters over dinner, Altman also drew a comparison between today's AI frenzy and the dot-com boom of the 1990s, when "smart people" became "overexcited" about the internet, the report noted. "Are we in a phase where investors as a whole are overexcited by AI? In my opinion, yes," Altman said, responding to a question from Bloomberg News. He cautioned that valuations in the sector are "insane" and warned, "Someone's gonna get burned there." However, he also said that "society as a whole" will not regret investing heavily in AI. OpenAI's Potential IPO And New Government Partnership During the conversation, Altman said, "I do think we have to go public someday, probably," though he said he is not "well-suited" to be a public company CEO, according to the report. He also described OpenAI now operating like four businesses: a consumer technology arm, a massive infrastructure unit, a research lab and a division focused on "new stuff" such as hardware and brain-computer interfaces. Earlier this year, Altman joined SoftBank Group's SFTBF SFTBY Masayoshi Son and Oracle Corp's ORCL Larry Ellison to launch Stargate, a $500 billion infrastructure initiative. OpenAI also announced a new deal with the U.S. General Services Administration. Under President Donald Trump's AI Action Plan, federal agencies will get access to ChatGPT Enterprise for just $1 per agency for the next year. Read Next: Obama Slams Trump's 'Coup' Allegations Over 2016 Election As 'Outrageous' And 'Ridiculous' In Rare Public Rebuke Photo Courtesy: Meir Chaimowitz on Shutterstock.com ORCLOracle Corp$247.150.90%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum93.65Growth64.38QualityN/AValue13.34Price TrendShortMediumLongOverviewSFTBFSoftBank Group Corp$104.594.17%SFTBYSoftBank Group CorpNot Available-%Market News and Data brought to you by Benzinga APIs

OpenAI Chief Sam Altman Cautions Against AI Bubble | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. "When bubbles happen, smart people get overexcited about a kernel of truth," Sam Altman said in a Friday (Aug. 15) interview with The Verge. "If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited. Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes." Altman's comments to the Verge were flagged Monday (Aug. 18) in a report by CNBC, which notes that the CEO is not alone in raising concerns about the speed of AI growth, joining the likes of Alibaba Co-founder Joe Tsai, Bridgewater Associates' Ray Dalio and Apollo Global Management Chief Economist Torsten Slok. Slok had contended that today's AI bubble is actually bigger than the dotcom bubble, with the 10 leading companies in the S&P 500 more overvalued than they were during the 1990s, the CNBC report added. Ray Wang, CEO of Silicon Valley-based Constellation Research, told the network that he believed Altman's comments carry some weight, but that the risks depend on the company. "From the perspective of broader investment in AI and semiconductors ... I don't see it as a bubble. The fundamentals across the supply chain remain strong, and the long-term trajectory of the AI trend supports continued investment," he said. Meanwhile, AI companies continue to rake in significant amounts of funding. Last week saw OpenAI rival Cohere raise $500 million at a $6.8 billion valuation. Also last week, Cognition reportedly raised $500 million to support its AI software code generation products, with the funding round doubling the company's valuation to $9.8 billion. In other AI news, PYMNTS wrote recently about predictions about the technology's potential to one day cure cancer. Many experts expressed various degrees of skepticism about such claims. "The idea that AI will eliminate cancer is incredibly optimistic, but honestly, it is not as straightforward as it sounds," said Kiara DeWitt, CEO of Injectco and a nurse. "Although AI can drastically improve diagnostics ... a full cure is another matter entirely." Although AI-driven image recognition software has the potential to increase five-year survival rates by 30%, DeWitt added, "curing" every case is "still beyond AI's reach alone." "Most cancer 'cures' are heavily individualized, dependent on patient genetics, immune responses and countless environmental variables no AI model fully comprehends today," she said.

AI Bubble Worries 'Spooking' Tech Investors | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. That's according to a Financial Times report Wednesday (Aug. 20), which pointed to downturns in the European and Asian markets following declines of big name tech companies such as Nvidia, Arm and Palantir. Helping fuel this drop, the report added, is a new report from MIT which found that most organizations are getting "zero return" on their investments into the generative artificial intelligence (AI) space. "The story is spooking people," a trader close to a multibillion-dollar US tech fund told the FT. The MIT report found that only 5% of "integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable [profit and loss] impact." Meanwhile, OpenAI CEO Sam Altman warned last week that an AI bubble could be forming. "Are investors over excited? My opinion is yes," Altman said in an interview reported by The Verge. "I do think some investors are likely to lose a lot of money, and I don't want to minimize that, that sucks. There will be periods of irrational exuberance. But on the whole the value for society will be huge." The FT report also noted the rise of Chinese firm DeekSeek, which earlier this year released a high-performing AI modelthat called into question the level of spending by American artificial intelligence firms. DeepSeek claimed that model only cost $5.6 million to train using about 2,000 of slower Nvidia chips. That figure is significantly lower than what it took to train frontier models from companies like OpenAI, Google and Anthropic. The news erased $600 billion of market value from Nvidia in a single day. While tech stocks rebounded, the FT says the incident highlighted investor sensitivity to negative AI news. In related news, PYMNTS last week explored the cost of owning AI models for enterprises. While the cost of the models has fallen since 2022, the overall cost of ownership "has been resistant to declines," said Muath Juady, founder of SearchQ.AI. "The real expenses lie in the hidden infrastructure, including data engineering teams, security compliance, constant model monitoring, and integration architects necessary to connect AI with existing systems," added Juady. For every dollar spent on AI models, companies are spending $5 to $10 to make the models "production-ready and enterprise-compliant," Juady told PYMNTS. "The integration challenges tend to be more expensive than the technology itself and require substantial investment in change management and process redesign, which many organizations underestimate."

OpenAI CEO Sam Altman warns of AI bubble, says investors are...

OpenAI CEO Sam Altman warned that the billions of dollars being plowed into the artificial intelligence arms race risks causing a bubble comparable to the dot-com crash of the early 2000s. "When bubbles happen, smart people get overexcited about a kernel of truth," Altman said during a dinner with a group of journalists, The Verge reported on Friday. "Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes." Altman likened the AI funding rush to "the tech bubble," when investors "got overexcited" about internet-based companies in the late 1990s. Between March 2000 and October 2002, the Nasdaq lost nearly 80% of its value after many of these online companies failed to turn a profit. In a report released last month, Torsten Slok, head economist at Apollo Global Management, argued that the AI bubble is actually bigger than the internet bubble, with the top 10 companies in the S&P 500 more overvalued than they were in the late 1990s. Ray Wang, research director for semiconductors, supply chain and emerging technology at Futurum Group, took a more optimistic stance. "From the perspective of broader investment in AI and semiconductors... I don't see it as a bubble. The fundamentals across the supply chain remain strong, and the long-term trajectory of the AI trend supports continued investment," he told CNBC in a statement. However, there is a high amount of speculative capital being thrown at companies who only have perceived potential - which could lead to pockets of overvaluation, Wang added. "Calling it a bubble is too simplistic. What we're really seeing is a supply chain bottleneck - too much capital with real need, chasing too little compute," Kyle Okamoto, chief technology officer at Aethir, a decentralized cloud GPU network, told The Post on Monday. "Until infrastructure catches up, prices and hype will stay inflated, but that's not a bubble bursting - that's a market maturing." Fears that the US might be in an AI bubble grew earlier this year after the explosive rise of DeepSeek, a Chinese tech firm that claimed to make a competitive AI model with a fraction of the time and money it took American rivals. DeepSeek said its AI chatbot had been trained for under $6 million, far below the billions spent by US counterparts. OpenAI is on track to pass $20 billion in annual recurring revenue but it remains unprofitable, Altman said earlier this month. Its recent launch of ChatGPT-5 was so disappointing that customer complaints pushed the company to go back to the drawing board while reverting to the GPT-4 model. During the dinner with reporters, Altman said the term artificial general intelligence, or "AGI," is losing its relevance. AGI refers to a form of AI that can perform any intellectual task that a human can - which Altman previously said could be achieved in the "reasonably close-ish future." Altman's startup continues to draw in big investments. In March, OpenAI raised $40 billion at a $300 billion valuation - far above the largest amount ever raised by a tech company. It now is preparing to sell around $6 billion in stock at roughly a $500 billion valuation. Altman said that he expects OpenAI to spend trillions of dollars on data center expansions. He has also expressed interest in buying Chrome if the US government forces Google to sell off the web browser as part of an antitrust case. Separately, Altman confirmed reports that OpenAI is planning to launch a brain-computer interface startup similar to Elon Musk's Neuralink - and took a jab at his rival's firm xAI. "You will definitely see some companies go make Japanese anime sex bots because they think that they've identified something here that works," Altman said in a dig at Musk's Grok chatbot. "You will not see us do that. We will continue to work hard at making a useful app, and we will try to let users use it the way they want, but not so much that people who have really fragile mental states get exploited accidentally."

Bubble or no bubble? Wall Street wonders about AI

In this article, you will find an in-depth look at the growing doubts surrounding AI, including a shocking report from MIT, the failed launch of GPT-5, and feverish financial markets fearing a speculative bubble. You will also see how the promises of OpenAI and industry giants are coming up against fragile business models and much less triumphant adoption by businesses than announced. Fortune's headline reads "MIT report: 95% of generative AI pilot projects fail in companies." The release of the report is not unrelated to the weakness of US tech stocks since the beginning of the week. Yesterday, the underperformance of the AI heavyweights dragged down the S&P 500 index by 0.6%, even though 70% of its components closed in positive territory. Palantir is a case in point, falling 15% in five sessions after hitting a record high of $190 on August 12. CoreWeave is another example of the hype surrounding the sector. The report The GenAI Divide: State of AI in Business 2025, published by MIT's NANDA initiative, paints a grim picture of the use of generative artificial intelligence in businesses. Despite massive enthusiasm and significant investment, only about 5% of experiments lead to a significant acceleration in revenue. Most stagnate and have no measurable impact on the bottom line. Success stories tend to be agile, often very young startups that focus on a specific problem, execute quickly, and build effective partnerships. MIT highlights a flaw in integration rather than a technological problem. The models themselves are effective, but their deployment often fails because they do not adapt to internal processes and remain too generic for use in companies. In addition, resources are often poorly allocated: more than half of generative AI budgets go to sales and marketing tools, while the best return on investment is seen in automating back-office tasks, eliminating outsourcing, and streamlining operating costs. Ultimately, the main tangible impact is visible in employment, with a gradual reduction in customer support and administrative positions, mainly through not replacing departing employees. For a technology that has only recently been adopted, this is hardly surprising, especially since major developments such as agents are not really taken into account. However, the results must be weighed against the huge investments already made and the promises made by some influential industry leaders. However, in recent days, some investors have been fearful of a second "DeepSeek moment" on the stock market. At the beginning of the year, the irresistible bullish stock market performance of Western AI companies was shaken by the emergence of open, low-cost Chinese competition, whose performance was considered to be relatively close to that of well-established models. These characteristics called into question the hegemony of the existing players and the prospect of ever-increasing infrastructure spending. Palantir's decline is evident in the DeepSeek episode. A further decline has been observed in recent days. Over the weeks, the pitfall was avoided because everyone eventually convinced themselves that the investment cycle remained exceptional. Two nagging questions remained: how useful is all this, and how far will it go? It is this double question that is coming back with a vengeance at the end of August. First, because the botched launch of GPT-5 by OpenAI has raised new questions about artificial general intelligence (AGI). Second, because the business model of companies in the sector is anything but stable. Let's examine these two points one by one. Gary Marcus, a frequent critic of current approaches to AI, points out in an interview with French newspaper Le Grand Continent that the stagnation observed with GPT-5 shows that OpenAI has lost its technical lead and that Altman's initial statements on AGI now appear hollow (the CEO of OpenAI himself agreed last week that the concept of AGI could lose its relevance). Marcus adds that this highlights a structural limitation of large language models (LLMs): their inability to generalize beyond their training data, which resembles a systemic flaw. As for the question of the economic model, it remains at the heart of the debate on technological disruption. Altman, again, compared the current period to the internet speculative bubble at the turn of the millennium, 25 years ago, in The Verge. But he believes that AI is a major change whose positive economic effects will outweigh the negative ones. "Some people will lose a lot of money, but others will make a lot," he sums up, while noting in the same interview that he hopes to raise trillions of dollars to build data centers capable of supporting OpenAI's growth. For the moment, the sector's flagship company, with the exception of Nvidia (for hardware) and Palantir (for deployment), is a financial black hole: $3.7 billion in revenue and $5 billion in losses in 2024 for OpenAI. This year, revenue could rise to $12-13 billion and losses could reach $8 billion. Analysts are finding it difficult to make projections. JPMorgan Chase has brought forward the date to 2029 for the company to become cash flow positive, assuming revenue growth is on track and investments are sustainable. Currently, ChatGPT has an estimated 700 million users, 10% of whom are paying subscribers, according to Wired (OpenAI has not confirmed this figure). This is far from enough to offset the necessary infrastructure costs, even when adding in ancillary revenue generated by OpenAI (professional solutions, agents, etc.). But it is convincing enough to attract huge amounts of capital from investors looking for the next Amazon, Alphabet or Meta. This source is unlikely to dry up in the short term. It remains to be seen whether OpenAI and its peers will come out on the right or wrong side of the current upheaval. We remember that in the late 1990s, telecom operators were seen as the natural winners of the internet revolution. What followed showed that value had migrated elsewhere.