The AI Bubble: Sam Altman Admits What Few in the Industry Dare Say

Artificial Intelligence has been the hottest topic in tech for the past two years. From generative AI chatbots to autonomous coding assistants, billions of dollars have poured into startups promising to revolutionize everything from healthcare to finance. But even the leader of the pack—Sam Altman, CEO of OpenAI—has now openly admitted what many investors and economists have been warning for months: we’re in a bubble.

Altman’s Rare Admission

In a recent interview, Sam Altman compared the current frenzy around AI to the dot-com bubble of the late 1990s. Back then, internet companies raised sky-high valuations before most of them collapsed, leaving only a handful of survivors like Amazon and Google.

According to Altman, the same irrational exuberance is now driving valuations of AI startups. He described it as “insane” that teams of “three people and an idea” are receiving funding at billion-dollar valuations.

“Are investors as a whole over-excited about AI? I think yes,” said Altman.

It’s a striking admission from the man leading OpenAI, the company behind ChatGPT and one of the central players in the race toward Artificial General Intelligence (AGI).

Why the Bubble Feels Familiar

The parallels with the dot-com era are obvious. Back then, telecommunications networks were built at breakneck speed, funded by investors convinced the internet would change everything. Many of those investments collapsed when companies failed to turn hype into profits.

Today, the equivalent is data centers and AI chips. Companies are pouring billions into building GPU-powered infrastructure while startups rush to market with AI-driven apps. But just like in 2000, most of these ventures will not survive.

Economists like Torsten Sløk of Apollo Global Management warn that today’s AI giants are even more overvalued than tech titans were at the height of the 1990s bubble. The top 10 AI-related companies in the S&P 500 trade at far higher price-to-earnings ratios than their predecessors ever did.

Cracks Already Showing

The first cracks are already visible. OpenAI’s much-hyped GPT-5, designed to optimize inference costs in the face of GPU shortages, was widely seen as a disappointment. Meanwhile, challengers like China’s DeepSeek are delivering competitive models at a fraction of the cost, shaking the industry’s foundations.

At the same time, the data center arms race is beginning to look unsustainable. Even tech giants like Microsoft and Amazon may face limits in how much infrastructure they can build before demand plateaus.

Startups, meanwhile, continue to raise billions. Ilya Sutskever’s Safe Superintelligence and Mira Murati’s Thinking Machines are just two examples of AI ventures attracting astronomical sums—despite little clarity on how they’ll survive an eventual correction.

Winners and Losers in the Coming Correction

Altman himself has no illusions: “Someone is going to lose a phenomenal amount of money,” he warned. Yet he also believes that in the long run, AI will generate a net positive for the global economy—just as the internet did after its own crash.

In other words, while 99% of AI startups may disappear, as Baidu’s Robin Li predicted, the survivors could be transformative. Generative AI, much like e-commerce and search engines two decades ago, is here to stay. The real question is which companies will withstand the crash.

Conclusion

Sam Altman’s candid recognition of the bubble is both a warning and a strategic move. OpenAI may hope to position itself as the Amazon of the AI era—one of the few survivors that emerges stronger from the wreckage.

But for now, the AI market looks dangerously inflated. Startups are raising billions with little more than slide decks. Big Tech is racing to build infrastructure that may outpace real demand. And investors risk reliving the lessons of 2000: hype alone cannot sustain an industry forever.

Whether the correction comes next year or in five years, the AI bubble will burst. The question is not if, but when—and who will still be standing when the dust settles.