At OpenAI's DevDay this week, OpenAI boss Sam Altman did what American tech bosses rarely do these days: 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. Skeptics 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 remarked that he expected investors would make some bad calls and silly start-ups would walk away with crazy money. However, he maintains that with OpenAI, there's something real happening here. But not everyone is convinced.
Warnings have come from significant players like the Bank of England, the International Monetary Fund, and JP Morgan boss Jamie Dimon, who told the BBC that the level of uncertainty should be higher in most people's minds. Early AI entrepreneur Jerry Kaplan, speaking at a Silicon Valley panel discussion, emphasized that the stakes are much higher today than during the dot-com boom, cautioning that when the bubble breaks, it's going to be really bad, and not just for people in AI; it's going to drag down the rest of the economy.
At Stanford Graduate School of Business, Prof Anat Admati stressed the difficulty in timing a bubble, noting, It is very hard to time a bubble. And you can't say with certainty you were in one until after the bubble has burst.
Despite concerns, AI-related enterprises accounted for 80% of the striking gains in the American stock market this year, with global AI spending expected to reach $1.5 trillion by year-end. OpenAI, at the center of numerous high-stakes deals, recently entered a $100 billion agreement with Nvidia and is planning major equipment purchases from rival AMD, drawing scrutiny over complex financing arrangements, which some critics label as circular financing.
As tensions rise, Mr Kaplan identified characteristic signs of trouble, such as companies announcing major, capital-heavy initiatives without the necessary funding. He warned that the AI sector could lead to an environmental crisis due to massive data centers being built in remote locations.
Overall, while investments in infrastructure for AI workloads could enable significant innovations, there's growing concern that the enthusiasm and money fueling this growth may soon dwindle, leaving a potential economic fallout in its wake.
In Silicon Valley, the debate over whether AI companies are overvalued has taken on a new urgency. Skeptics 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 remarked that he expected investors would make some bad calls and silly start-ups would walk away with crazy money. However, he maintains that with OpenAI, there's something real happening here. But not everyone is convinced.
Warnings have come from significant players like the Bank of England, the International Monetary Fund, and JP Morgan boss Jamie Dimon, who told the BBC that the level of uncertainty should be higher in most people's minds. Early AI entrepreneur Jerry Kaplan, speaking at a Silicon Valley panel discussion, emphasized that the stakes are much higher today than during the dot-com boom, cautioning that when the bubble breaks, it's going to be really bad, and not just for people in AI; it's going to drag down the rest of the economy.
At Stanford Graduate School of Business, Prof Anat Admati stressed the difficulty in timing a bubble, noting, It is very hard to time a bubble. And you can't say with certainty you were in one until after the bubble has burst.
Despite concerns, AI-related enterprises accounted for 80% of the striking gains in the American stock market this year, with global AI spending expected to reach $1.5 trillion by year-end. OpenAI, at the center of numerous high-stakes deals, recently entered a $100 billion agreement with Nvidia and is planning major equipment purchases from rival AMD, drawing scrutiny over complex financing arrangements, which some critics label as circular financing.
As tensions rise, Mr Kaplan identified characteristic signs of trouble, such as companies announcing major, capital-heavy initiatives without the necessary funding. He warned that the AI sector could lead to an environmental crisis due to massive data centers being built in remote locations.
Overall, while investments in infrastructure for AI workloads could enable significant innovations, there's growing concern that the enthusiasm and money fueling this growth may soon dwindle, leaving a potential economic fallout in its wake.
