Sam Altman Admits The AI Bubble Is Here

This article, written by Sam Blum, Senior Writer, Inc. was originally published on Inc.com.

In an interview with reporters from multiple publications on Thursday night, OpenAI CEO Sam Altman said he believes the AI sector has entered the territory of a financial bubble. 

The AI sector has exploded since 2022, largely based on the growth of Altman’s company and its flagship product, ChatGPT. Economists and tech critics have argued recently that the billions of dollars in venture investment in AI companies, and the crush of startups jumping on the AI bandwagon, has been reminiscent of the dot-com bubble and crash of the late 1990s. 

Altman made the same analogy in his interview with reporters. “When bubbles happen, smart people get overexcited about a kernel of truth,” Altman said, according to The Verge. “If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited.”

He added that “someone is going to lose a phenomenal amount of money. We don’t know who, and a lot of people are going to make a phenomenal amount of money.”  

Earlier this week, OpenAI released its newest model, GPT-5, to some negative reviews. The CEO had initially promised the model would offer “PhD-level intelligence” in most tasks. But the issue for many people came down to its tone: Users claimed GPT-5 has a terser and colder temperament than its predecessor, GPT-4o. 

Altman’s admission that AI is overvalued and in a bubble is significant. The CEO has served as one of the industry’s biggest boosters since the launch of ChatGPT in 2022. 

But Altman had hinted that the writing was on the wall last week, when he told CNBC that the term Artificial General Intelligence (AGI)—a milestone for researchers that involves AI that’s equal to or better than humans at most tasks—isn’t a “super useful term.” 

AGI, he said, is an over-used term that has lost its meaning. “I think the point of all of this is it doesn’t really matter and it’s just this continuing exponential of model capability that we’ll rely on for more and more things,” he told CNBC. 

Recent reports indicate OpenAI is valued at $300 billion and approaching $20 billion in annual recurring revenue this year. Despite those prolific numbers, the company is yet to turn a profit, the CEO recently confirmed to CNBC. One factor is that the computational power required to run Large Language Models built by OpenAI and its competitors is notoriously expensive. 

Warnings of an AI bubble bursting are not new. In 2023, the venture capitalist Jason Corsello, CEO and general partner of Acadian Ventures, told Inc: “This area of A.I. is somewhat overhyped. It’s over-invested, it’s overvalued. When you’re seeing seed-stage companies raise between $100 million and $150 million with nothing more than a pitch deck, that’s a bit concerning.”

OpenAI, for its part, is currently seeking a $500 billion valuation through a tender offer for current and former employees.