OpenAI CEO Sam Altman Acknowledges AI Bubble, Remains Bullish on Industry's Future

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.

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. ®

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 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.