OpenAI’s chairman says AI is in a bubble — but one that could be wildly lucrative

“I think the AI bubble will rhyme with the dot-com bubble and I believe with the benefit of hindsight, most of the excess of the dot-com bubble might have been justified,” OpenAI chairman Bret Taylor told venture capitalist Harry Stebbings on the latter’s podcast.

The buzz surrounding AI may echo the exuberance and excesses of the dot-com bubble in the late 1990s, OpenAI chairman Bret Taylor said in a podcast that aired on Wednesday.

Taylor was speaking to venture capitalist Harry Stebbings on the latter’s “The Twenty Minute VC” podcast when he was asked if AI is in a bubble. Taylor joined OpenAI’s board in November, shortly after Sam Altman was briefly ousted and reinstated as CEO.

“I think we are in a bubble. But I think bubbles have different shapes, and there’s a Mark Twain quote that history doesn’t repeat itself, but it rhymes,” Taylor told Stebbings.

“I think the AI bubble will rhyme with the dot-com bubble and I believe with the benefit of hindsight, most of the excess of the dot-com bubble might have been justified,” Taylor added.

Most of today’s leading tech companies like Amazon and Google, Taylor said, were started during the dot-com bubble.

“A huge percentage of the gains in the stock market over the past 30 years have more or less been these digital companies created in the dot-com bubble,” Taylor said.

“And so, I haven’t done the math on how much money was burned in that period, but I think that doesn’t mean that the excitement around the impact of the internet on the economy was false,” he added.

“I think the same thing is likely to happen in AI. We will look back and laugh at some of the excess, but I am confident we will have a brand-defining, likely trillion-dollar consumer company come out of this.”

Representatives for Taylor at OpenAI did not immediately respond to a request for comment from B-17 sent outside regular business hours.

Taylor, of course, is no stranger to the highs and lows of Silicon Valley.

The Stanford graduate started his career at Google in 2003 before stints at Facebook and Salesforce, where he was CTO and co-CEO, respectively. Taylor was also the chair of Twitter’s board before Elon Musk acquired the company in October 2022.

To be sure, the jury is still out on whether AI will live up to the hype surrounding it.

In June, Goldman Sachs published a report suggesting that the return on investment for AI might be disappointing.

“AI technology is exceptionally expensive, and to justify those costs, the technology must be able to solve complex problems, which it isn’t designed to do,” Jim Covello, Goldman Sachs’ head of global equity research, wrote in the report.

But that hasn’t stopped investors from pouring funds into leading AI players like Taylor’s OpenAI.

On Wednesday, the ChatGPT maker announced that it had raised $6.6 billion in new funding at a $157 billion post-money valuation.

The company is now one of the most valuable startups in the world, commanding a valuation on par with publicly traded companies like Uber and AT&T.

We’ve raised new funding to accelerate our mission to ensure that artificial general intelligence benefits all of humanity. https://t.co/ya6PwCd2x4

— OpenAI Newsroom (@OpenAINewsroom) October 2, 2024

And OpenAI isn’t the only company riding the AI craze.

In May, Elon Musk’s AI startup xAI said it raised $6 billion for its Series B funding round. Musk said his company, which is just over a year old, had a pre-money valuation of $18 billion.