At OpenAI's DevDay this week, OpenAI boss Sam Altman did what American tech leaders rarely do these days: he actually answered questions from reporters.
I know it's tempting to write the bubble story, Mr Altman told me as he sat flanked by his top lieutenants. In fact, there are many parts of AI that I think are kind of bubbly right now.
In Silicon Valley, the discussion over whether AI companies are overvalued has taken on new urgency. Skeptics are privately and some now publicly questioning whether the rapid increase in the value of AI tech companies may be driven by what they call financial engineering. This leads to fears that these companies are overvalued.
Mr Altman predicted that investors would inevitably make some poor choices resulting in questionable start-ups receiving excessive funding. He maintained, however, that with OpenAI, there's something real happening here.
Not everyone is convinced. In recent days, warnings of an AI bubble have come from key financial entities, including the Bank of England and the International Monetary Fund, with JPMorgan boss Jamie Dimon commenting that the level of uncertainty should be higher in most people's minds.
Concerns are mounting in what is often deemed the tech capital of the world. During a panel discussion at Silicon Valley's Computer History Museum, early AI entrepreneur Jerry Kaplan shared insights from his experience, highlighting his trepidation concerning the significant financial stakes in the AI sector compared to the earlier dot-com boom. He expressed, When [the bubble] breaks, it's going to be really bad, and not just for people in AI; it's going to drag down the rest of the economy.
Amidst these worries, Stanford Graduate School of Business professor Anat Admati remarked on the difficulty of accurately timing a bubble, stating, It is very hard to time a bubble. And you can't say with certainty you were in one until after the bubble has burst.
The data remains unsettling for many observers: AI-related enterprises are said to have accounted for 80% of the remarkable gains in the American stock market this year, and global spending on AI is expected to reach around $1.5 trillion before the end of 2025.
OpenAI, which brought AI into the consumer mainstream with ChatGPT in 2022, is at the center of a complex network of deals garnering scrutiny. For instance, it recently entered into a $100 billion cooperation agreement with Nvidia, the most valuable publicly traded company globally, expanding earlier investments Nvidia had made in Altman's firm.
Kaplan noted that he sees several signs that could hint the AI sector—along with the wider economy—might be in jeopardy. He stressed that in times of exuberance, companies often announce major initiatives without the necessary capital backing, and there is a surge in retail investors rushing to join the start-up trend.
As Silicon Valley's AI sector undergoes intense scrutiny due to rising valuations and potential overextensions, the crucial question remains: Is the funding tide shifting in this booming industry?Nvidia looks like the last lender or investor, said Rihard Jarc, underscoring concerns about the future of AI financing.
I know it's tempting to write the bubble story, Mr Altman told me as he sat flanked by his top lieutenants. In fact, there are many parts of AI that I think are kind of bubbly right now.
In Silicon Valley, the discussion over whether AI companies are overvalued has taken on new urgency. Skeptics are privately and some now publicly questioning whether the rapid increase in the value of AI tech companies may be driven by what they call financial engineering. This leads to fears that these companies are overvalued.
Mr Altman predicted that investors would inevitably make some poor choices resulting in questionable start-ups receiving excessive funding. He maintained, however, that with OpenAI, there's something real happening here.
Not everyone is convinced. In recent days, warnings of an AI bubble have come from key financial entities, including the Bank of England and the International Monetary Fund, with JPMorgan boss Jamie Dimon commenting that the level of uncertainty should be higher in most people's minds.
Concerns are mounting in what is often deemed the tech capital of the world. During a panel discussion at Silicon Valley's Computer History Museum, early AI entrepreneur Jerry Kaplan shared insights from his experience, highlighting his trepidation concerning the significant financial stakes in the AI sector compared to the earlier dot-com boom. He expressed, When [the bubble] breaks, it's going to be really bad, and not just for people in AI; it's going to drag down the rest of the economy.
Amidst these worries, Stanford Graduate School of Business professor Anat Admati remarked on the difficulty of accurately timing a bubble, stating, It is very hard to time a bubble. And you can't say with certainty you were in one until after the bubble has burst.
The data remains unsettling for many observers: AI-related enterprises are said to have accounted for 80% of the remarkable gains in the American stock market this year, and global spending on AI is expected to reach around $1.5 trillion before the end of 2025.
OpenAI, which brought AI into the consumer mainstream with ChatGPT in 2022, is at the center of a complex network of deals garnering scrutiny. For instance, it recently entered into a $100 billion cooperation agreement with Nvidia, the most valuable publicly traded company globally, expanding earlier investments Nvidia had made in Altman's firm.
Kaplan noted that he sees several signs that could hint the AI sector—along with the wider economy—might be in jeopardy. He stressed that in times of exuberance, companies often announce major initiatives without the necessary capital backing, and there is a surge in retail investors rushing to join the start-up trend.
As Silicon Valley's AI sector undergoes intense scrutiny due to rising valuations and potential overextensions, the crucial question remains: Is the funding tide shifting in this booming industry?Nvidia looks like the last lender or investor, said Rihard Jarc, underscoring concerns about the future of AI financing.
