Sam Altman, CEO of OpenAI, has warned that an AI bubble may be forming as industry spending on artificial intelligence accelerates

OpenAI CEO Sam Altman has publicly warned that the artificial intelligence market is in a bubble, despite his deep belief in AI’s transformative potential. Speaking to a small group of reporters, Altman acknowledged that investor enthusiasm for AI has become excessive, comparing the current frenzy to the dot-com bubble of the late 1990s. “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes,” he said. Yet he also affirmed that AI is “the most important thing to happen in a very long time.” His remarks highlight a growing tension within the tech world: while the long-term promise of AI remains undeniable, short-term speculation may be inflating valuations beyond sustainable levels. Altman’s comments come amid a surge in AI-related investment, with startups raising hundreds of millions on minimal track records and valuations reaching unprecedented heights. The rise of Chinese AI startup DeepSeek, which claimed to train a powerful language model for under $6 million, intensified concerns by suggesting that the cost of AI development could be dropping rapidly—though some experts remain skeptical of the claims. Meanwhile, OpenAI itself remains unprofitable despite projecting annual recurring revenue of over $20 billion in 2024. The company’s latest GPT-5 rollout also faced criticism for usability issues, prompting OpenAI to restore access to older GPT-4 models for paying users. Despite these challenges, investor confidence in OpenAI remains strong. The company is preparing a $6 billion secondary stock sale that would value it at around $500 billion—up from a $300 billion valuation in March following a $40 billion funding round, the largest ever for a private tech firm. Altman emphasized that OpenAI is preparing to spend “trillions of dollars” on data center expansion in the near future, driven by soaring demand for computing power. He noted that OpenAI has already surpassed the capacity of Microsoft Azure and has signed a deal with Google Cloud, but still plans to acquire more infrastructure wherever possible. The broader tech industry is following suit. Microsoft, Amazon, Alphabet, and Meta have all raised their capital expenditure forecasts, with Microsoft targeting $120 billion, Amazon over $100 billion, Alphabet $85 billion, and Meta up to $72 billion. Analysts like Wedbush’s Dan Ives see this surge as validation of AI’s long-term potential, describing the current phase as “the second inning of a nine-inning game.” Citi’s Rob Rowe also distinguished today’s AI boom from the dot-com era, noting that unlike then, today’s major AI players have strong earnings and cash flow, allowing them to fund growth internally rather than relying on debt. Still, concerns persist. Alibaba co-founder Joe Tsai warned of a brewing AI bubble, questioning whether hundreds of billions in data center spending are truly justified. He expressed concern over companies building infrastructure “on spec” without clear demand. Altman acknowledged that some investors will likely suffer losses, but believes the societal benefits of AI will ultimately justify the risks—just as the dot-com crash paved the way for the modern internet. In a broader vision, Altman also discussed OpenAI’s expansion into consumer hardware, brain-computer interfaces, and social media. He even hinted at interest in acquiring Chrome if the U.S. government were to force Google to sell it. When asked if he’d still be CEO in three years, he joked, “Maybe an AI will be.” The message is clear: while the market may be overheating, OpenAI remains committed to pushing the boundaries of AI, regardless of short-term volatility.