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.”