Fears Over AI Bubble Bursting Grow in Silicon Valley

At OpenAI’s DevDay this week, CEO Sam Altman did something rare for a major American tech leader: he answered questions from reporters.

In recent days, warnings about an AI bubble have come from the Bank of England, the International Monetary Fund, and JPMorgan Chase CEO Jamie Dimon. (Photo: Patrick Nouhailler Wikimedia Commons) 

“I know it’s tempting to write the bubble story,” 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,” Lily Jamali reported for BBC News.

In Silicon Valley, debate over whether AI companies are overvalued has taken on new urgency.

Skeptics — some privately, others now publicly — are questioning whether the rapid rise in AI company valuations is at least partly the result of “financial engineering.”

In other words, they fear the AI sector may be overinflated.

Altman said he expects investors will make bad bets and that “silly startups” will walk away with “crazy money.”

But regarding OpenAI, he insisted, “there’s something real happening here.” Not everyone is convinced.

In recent days, warnings about an AI bubble have come from the Bank of England, the International Monetary Fund, and JPMorgan Chase CEO Jamie Dimon, who told the BBC that “the level of uncertainty should be higher in most people’s minds.”

Veteran Silicon Valley entrepreneur Jerry Kaplan, who says he has lived through four previous bubbles, warned of potentially severe fallout. “When [the bubble] breaks, it’s going to be really bad — and not just for people in AI,” he said. “It’s going to drag down the rest of the economy.”