Altman criticized inflated valuations, calling it “insane” that tiny AI startups are securing massive funding. “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,” he warned.
While Altman’s comments raised eyebrows, others disagree. Former Google CEO Eric Schmidt has called it “unlikely” that today’s surge is a true bubble, while Alibaba cofounder Joe Tsai admitted he sees “some kind of bubble” forming.
MIT’s Eye-Opening Report: The AI Bubble
A recent MIT study cast further doubt on AI’s immediate payoff. Researchers found that 95% of AI pilot programs failed to deliver measurable savings or increased profits. The issue wasn’t the technology itself, but a “learning gap”—companies struggled to use AI effectively.
“Most firms are deploying AI in marketing when the bigger opportunities lie in back-end processes,” the report noted. With $30–$40 billion already spent on enterprise AI, the lack of returns raises questions about sustainability.
Meta Pulls Back
Adding to uncertainty, Meta recently restructured its AI division, breaking up its “superintelligence” team into smaller units focused on research, training, products, and infrastructure. Reports suggest Meta is considering downsizing and has paused new hiring in its AI group. This pivot marks a significant shift for CEO Mark Zuckerberg, who only months ago was luring AI talent with record-breaking bonuses.
Lessons from the Dot-Com Era
A Goldman Sachs report compared the AI surge to the dot-com bubble but concluded key differences exist. Unlike many internet startups in 2000, today’s “Magnificent Seven” — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla — are posting strong profits. Nvidia, for example, quintupled its revenues between 2022 and 2025.
