OpenAI's CEO shares cautionary insights about over-inflated AI valuations, drawing parallels to the dot-com crash.
OpenAI's Sam Altman has warned that the booming investment in AI could soon lead to a bubble. In his interview, he also drew comparisons with the infamous dot-com crash of the early 2000s. But despite AI's transformative potential, Altman cautions that investors might be rushing into the market without fully understanding the risks, potentially inflating valuations to unsustainable levels because the market may be “overexcited” about its prospects.
Sam Altman mentions,
“When bubbles happen, smart people get overexcited about a kernel of truth”
Altman’s comments come at a time when companies like OpenAI are seeing rapid growth in both users and revenue. OpenAI, for example, according to what Altman mentioned to CNBC, is on track to surpass $20 billion in annual recurring revenue this year.
Altman said in a recent interview with CNBC, just like the dot-com era, there is a real and valuable technology at the center of the AI frenzy.
Parallels to the Dot-Com Bubble
Altman’s warnings resonate with experts like business professor Rik Gordon from the University of Michigan and Ray Dalio of Bridgewater Associates. Gordon has already compared the AI market to the 1999 tech bubble, noting that some investors are showing signs of overconfidence, as evidenced by the sudden plunge in stock values of companies like CoreWeave.
Dalio, alongside Apollo Global Management’s economist Torsten Sløk, has gone as far as to claim that AI stocks may be even more overvalued than those during the dot-com boom. As CNBC mentions, between March 2000 and October 2002, the Nasdaq lost nearly 80% of its value. That was due to investors pouring money into internet-based companies that failed to deliver long-term profits.
The Path Forward
Despite the bubble fears, Altman remains optimistic about AI's future. He highlighted the enormous potential of OpenAI’s products, including ChatGPT, which he believes is on a trajectory to surpass Google as one of the most visited websites globally. He states,
“Pretty soon, billions of people a day will be talking to ChatGPT.”
However, Altman also acknowledged the challenge of surpassing Google, a task that would be “really hard,” he admitted. His vision for AI extends far beyond today's capabilities. According to MobileAppDaily, OpenAI is actively exploring brain-computer interface technology, venturing into the same innovative space as Neuralink.
Additionally, Altman’s candid insights shed light on the complexity of the AI industry, where promises of groundbreaking technologies are driving up valuations. At the same time, the path to profitability remains unclear because of the fine line between pioneering innovation and speculative overvaluation.
Despite the cautionary tone, Altman does not see himself as a natural long-term CEO for OpenAI. When asked about his future role, he humorously suggested,
“I mean, maybe an AI is in three years. That’s a long time.”
