OpenAI’s CEO, Sam Altman, recently shared insights regarding the company’s ambitious plans and the current state of the artificial intelligence industry. In an interview published by The Verge on Friday, he discussed OpenAI’s expansion into consumer hardware, brain-computer interfaces, and social media. These initiatives come on the heels of the massive $40 billion funding round back in March. This extraordinary feat brings the company’s valuation to $300 billion, larger than any other dollar value raised by a private tech company.
Yet surprisingly, Altman’s statements show a measure of restraint that demonstrates that even he isn’t in control of the wild west that AI has become. He predicts OpenAI will spend trillions on data center infrastructure in the near future. This action underscores the company’s deep seriousness of purpose to scale its rapid expansion. Yet, despite this impressive AR, which is on track to surpass $20 billion this year, the company is still not profitable.
Altman admits he’s really looking forward to talking about funding and revenue. He’s got his sights on snatching up Google’s Chrome browser should regulators require the tech behemoth to divest it. This possible new directional shift is further evidence of OpenAI’s desire to expand its reach into other tech domains.
Altman addressed a growing concern about a possible AI bubble. He went as far as to equate it to the famous dot-com bubble of the late 1990s. He said, “When bubbles occur, smart people get unduly exuberant on a nugget of truth.” He warned though that AI does have transformative potential like the investors hope, but investors could get overly excited.
He continued to paint an unflattering picture of today’s investor climate. He went on to boldly declare, “Are we in a cycle where investors as a community are overhyped on AI? Yes, of course we are. Is AI the most significant thing to come along in a long time? I think so too.” This duality is indicative of his faith in the importance of AI, but recognition that the market may have overvalued at this time.
Crucially, analysts agree with Altman’s worries. Indeed, some even go so far as to suggest that the current AI bubble may be even bigger than that of the internet. Torsten Slok, chief economist at Apollo Global Management, pointed out that “the top 10 companies in the S&P 500 are more overvalued than they were in the 1990s,” raising alarms about the sustainability of high valuations.
Observers have an obvious historical parallel in clear view. When the dot-com bubble burst, the Nasdaq fell almost 80% between March 2000 and October 2002 as many of these internet companies were unable to become profitable. Altman’s statements invite scrutiny of whether today’s AI companies are positioned for similar challenges.
Interestingly, despite all of these warnings, not everyone in the industry is quick to call the current landscape a bubble. Industry analyst Ray Wang takes issue with the bubbling bubble theory. Further, he said, “From the perspective of broader investment in AI and semiconductors… this I don’t see it as a bubble. The fundamentals on the supply chain are strong, and the long-term trajectory of the AI trend makes a bullish case for investment in this space.
Altman has the right to consider his future career prospects within OpenAI. He laughed, “I don’t know—I’m just saying, perhaps an AI. That’s a long way off—three years.” He is just as passionate and dedicated to his position. He admits that with fast-paced changes in technology, it’s hard to say what leadership roles will look like in the industry.
OpenAI’s large language models, like ChatGPT, have been created with minimal training costs, less than $6 million, showing effectiveness of resource use. As a leader in AI development, OpenAI must navigate both innovation and investment carefully to ensure sustainable growth and avoid pitfalls associated with overvaluation.