At OpenAI's DevDay this week, OpenAI boss Sam Altman did what American tech bosses rarely do: he actually answered questions from reporters. I know it's tempting to write the bubble story, Mr Altman told me. In fact, there are many parts of AI that I think are kind of bubbly right now. In Silicon Valley, the debate over whether AI companies are overvalued has taken on a new urgency.
Sceptics are privately - and some now publicly - asking whether the rapid rise in the value of AI tech companies may be, at least in part, the result of what they call financial engineering. In other words - there are fears these companies are overvalued.
Mr Altman said he expects investors to make some bad calls, and silly start-ups to walk away with crazy money. But with OpenAI, he told me, there's something real happening here. Not everyone is convinced. In recent days, warnings of an AI bubble have come from the Bank of England, the International Monetary Fund, as well as JP Morgan boss Jamie Dimon who told the BBC, the level of uncertainty should be higher in most people's minds.
At a panel discussion at Silicon Valley's Computer History Museum this week, early AI entrepreneur Jerry Kaplan expressed his concerns. Having lived through four bubbles, he warned that given the magnitude of money at stake now compared to the dot-com boom, the consequences could be dire. When [the bubble] breaks, it's going to be really bad, and not just for people in AI, he stated, predicting a potential drag on the economy as a whole.
While figures about AI-related enterprises indicate immense financial activity, they also generate concern. AI-related firms reportedly accounted for 80% of the gains in the U.S. stock market this year, with predictions of global AI spending reaching $1.5 trillion by the end of 2025.
OpenAI remains at the center of the financial scrutiny, being involved in several large-scale deal arrangements, including an eye-popping $100 billion collaboration with Nvidia. Such dealings raise questions about the AI sector's sustainability and potential vulnerabilities.
Kaplan noted signs of trouble often include companies announcing initiatives beyond their financial means, while retail investors rush into the market. As investments grow, there is concern over the physical impact on the environment, with gigantic data centers being constructed without accountability.
Despite the looming fears, there are those who believe the over-investment in AI could yield significant innovations in the future. Yet, as experts caution against complacency, the question remains whether the funds fueling this ambitious trajectory are beginning to dwindle.
Sceptics are privately - and some now publicly - asking whether the rapid rise in the value of AI tech companies may be, at least in part, the result of what they call financial engineering. In other words - there are fears these companies are overvalued.
Mr Altman said he expects investors to make some bad calls, and silly start-ups to walk away with crazy money. But with OpenAI, he told me, there's something real happening here. Not everyone is convinced. In recent days, warnings of an AI bubble have come from the Bank of England, the International Monetary Fund, as well as JP Morgan boss Jamie Dimon who told the BBC, the level of uncertainty should be higher in most people's minds.
At a panel discussion at Silicon Valley's Computer History Museum this week, early AI entrepreneur Jerry Kaplan expressed his concerns. Having lived through four bubbles, he warned that given the magnitude of money at stake now compared to the dot-com boom, the consequences could be dire. When [the bubble] breaks, it's going to be really bad, and not just for people in AI, he stated, predicting a potential drag on the economy as a whole.
While figures about AI-related enterprises indicate immense financial activity, they also generate concern. AI-related firms reportedly accounted for 80% of the gains in the U.S. stock market this year, with predictions of global AI spending reaching $1.5 trillion by the end of 2025.
OpenAI remains at the center of the financial scrutiny, being involved in several large-scale deal arrangements, including an eye-popping $100 billion collaboration with Nvidia. Such dealings raise questions about the AI sector's sustainability and potential vulnerabilities.
Kaplan noted signs of trouble often include companies announcing initiatives beyond their financial means, while retail investors rush into the market. As investments grow, there is concern over the physical impact on the environment, with gigantic data centers being constructed without accountability.
Despite the looming fears, there are those who believe the over-investment in AI could yield significant innovations in the future. Yet, as experts caution against complacency, the question remains whether the funds fueling this ambitious trajectory are beginning to dwindle.
