At OpenAI’s DevDay this week, chief executive Sam Altman did something unusual for a Silicon Valley boss: he took questions. Sitting beside his senior team, Altman admitted parts of artificial intelligence felt “bubbly”. Yet, he insisted, “there’s something real happening here”.
The comments come as concerns mount that AI firms may be overvalued. Critics warn that soaring valuations could be inflated by “financial engineering” and risky investments. Altman acknowledged some investors might make “bad calls” and that “silly start-ups” could attract “crazy money”.
Warnings have recently come from the Bank of England, the International Monetary Fund, and JP Morgan’s Jamie Dimon, who urged greater caution. Early AI entrepreneur Jerry Kaplan, speaking in Silicon Valley, said he has lived through four bubbles. He fears this one could be far worse given the trillions now at stake.
“ When it breaks, it’s going to be really bad,” Kaplan warned. “It will drag down the rest of the economy.”
OpenAI, still privately owned but valued near half a trillion dollars, sits at the heart of the debate. It recently signed a $100 billion deal with chipmaker Nvidia, while also planning major purchases from Nvidia rival AMD. Microsoft and Oracle also hold huge stakes.
Such intertwined deals have raised alarms about “circular financing” – companies investing in their own customers. Altman defended the arrangements, saying OpenAI’s revenue is growing faster than ever.
Still, doubts persist. If the AI boom bursts, experts fear not only financial fallout, but also abandoned data centres and wasted infrastructure. Yet, some argue that even overinvestment could leave behind the foundations of tomorrow’s digital world.
