OpenAI’s Sam Altman sees AI bubble forming as industry spending surges
OpenAI Co-Founder and CEO Sam Altman speaks at Snowflake Summit in San Francisco on June 2, 2025.
Justin Sullivan | Getty Images News | Getty Images
OpenAI CEO Sam Altman thinks the artificial intelligence market is in a bubble, according to a report from The Verge published Friday.
“When bubbles happen, smart people get overexcited about a kernel of truth,” Altman told a small group of reporters last week.
“Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes,” he was quoted as saying.
Altman appeared to compare this dynamic to the infamous dot-com bubble, a stock market crash centered on internet-based companies that led to massive investor enthusiasm during the late 1990s. Between March 2000 and October 2002, the Nasdaq lost nearly 80% of its value after many of these companies failed to generate revenue or profits.
His comments add to growing concern among experts and analysts that investment in AI is moving too fast. Alibaba co-founder Joe Tsai, Bridgewater Associates’ Ray Dalio and Apollo Global Management chief economist Torsten Slok have all raised similar warnings.
Last month, Slok stated in a report that he believed the AI bubble of today was, in fact, bigger than the internet bubble, with the top 10 companies in the S&P 500 more overvalued than they were in the 1990s.
In an email to CNBC on Monday, Ray Wang, CEO of Silicon Valley-based Constellation Research, told CNBC that he thought Altman’s comments carry some validity, but that the risks are company-dependent.
“From the perspective of broader investment in AI and semiconductors… I don’t see it as a bubble. The fundamentals across the supply chain remain strong, and the long-term trajectory of the AI trend supports continued investment,” he said.
However, he added that there is an increasing amount of speculative capital chasing companies with weaker fundamentals and only perceived potential, which could create pockets of overvaluation.
Many Fears of an AI bubble had hit a fever pitch at the start of this year when Chinese start-up DeepSeek released a competitive reasoning model. The company claimed one version of its advanced large language models had been trained for under $6 million, a fraction of the billions being spent by U.S. AI market leaders like OpenAI, though these claims were also been met with some skepticism.
Earlier this month, Altman told CNBC that OpenAI’s annual recurring revenue is on track to pass $20 billion this year, but that despite that, it remains unprofitable.
The release of OpenAI’s latest GPT-5 AI model earlier this month had also been rocky, with some critics complaining that it had a less intuitive feel. This resulted in the company restoring access to legacy GPT-4 models for paying customers.
Following the release of the model, Altman has also signaled more caution about some of the AI industry’s more bullish predictions.
Speaking to CNBC, he said that he thought the term artificial general intelligence, or “AGI,” is losing relevance, when asked whether the GPT-5 model moves the world any closer to achieving AGI.
AGI refers to the concept of a form of artificial intelligence that can perform any intellectual task that a human can — something that OpenAI has been working towards for years and that Altman previously said could be achieved in the “reasonably close-ish future.“
Regardless, faith in OpenAI from investors has remained strong this year. CNBC confirmed Friday that the company was preparing to sell around $6 billion in stock as part of a secondary sale that would value it at roughly $500 billion.
In March, it had announced a $40 billion funding round at a $300 billion valuation, by far the largest amount ever raised by a private tech company.
In The Verge article on Friday, the OpenAI CEO also discussed OpenAI’s expansion into consumer hardware, brain-computer interfaces and social media.
Altman also said that he expects OpenAI to spend trillions of dollars on its data center buildout in the “not very distant future,” and signaled that the company would be interested in buying Chrome if the U.S. government were to force Google to sell it.
Asked if he would be CEO of OpenAI in a few years, he was quoted as saying, “I mean, maybe an AI is in three years. That’s a long time.”
Shares of advertising technology company AppLovin and stock trading app Robinhood Markets each jumped about 7% in extended trading on Friday after S&P Global said the two will join the S&P 500 index.
The changes will go into effect before the beginning of trading on Sept. 22, S&P Global announced in a statement. AppLovin will replace MarketAxess Holdings, while Robinhood will take the place of Caesars Entertainment.
In March, short-seller Fuzzy Panda Research advised the committee for the large-cap U.S. index to keep AppLovin from becoming a constituent. AppLovin shares dropped 15% in December, when the committee picked Workday to join the S&P 500. Robinhood, for its part, saw shares slip 2% in June when it was excluded from a quarterly rebalancing of the index.
The S&P 500 already has a heavy concentration of large technology companies. Datadog and DoorDash entered earlier this year.
It’s normal for stocks to go up on news of their inclusion in a major index such as the S&P 500. Fund managers need to buy shares to reflect the updates.
AppLovin and Robinhood both went public on Nasdaq in 2021.
Robinhood has been a favorite among retail investors who have bid up shares of meme stocks such as AMC Entertainment and GameStop.
AppLovin itself became a stock to watch, with shares gaining 278% in 2023 and over 700% in 2024. As of Friday’s close, the stock had gained only 51% so far in 2025. AppLovin’s software brings targeted ads to mobile apps and games.
Earlier this year, AppLovin offered to buy the U.S. TikTok business from China’s ByteDance. U.S. President Donald Trump has repeatedly extended the deadline for a sale, most recently in June.
At Robinhood’s annual general meeting in June, a shareholder asked Vlad Tenev, the company’s co-founder and CEO, if there were plans for getting into the S&P 500.
“It’s a difficult thing to plan for,” Tenev said. “I think it’s one of those things that hopefully happens.”
He said he believed the company was eligible.
Shares of MarketAxess, which specializes in fixed-income trading, have fallen 17% year to date, while shares of Caesars, which runs hotels and casinos, are down 21%.
AppLovin and Robinhood ytd stock chart.
U.S. Federal Trade Commission Commissioner Rebecca Slaughter raised questions on Friday about the status of an artificial intelligence chatbot complaint against Snap that the agency referred to the Department of Justice earlier this year.
In January, the FTC announced that it would refer a non-public complaint regarding allegations that Snap’s My AI chatbot posed potential “risks and harms” to young users and said it would refer the suit to the DOJ “in the public interest.”
“We don’t know what has happened to that complaint,” Slaughter said on CNBC’s ‘The Exchange.” “The public does not know what has happened to that complaint, and that’s the kind of thing that I think people deserve answers on.”
Snap’s My AI chatbot, which debuted in 2023, is powered by large language models from OpenAI and Google and has drawn scrutiny for problematic responses.
The DOJ did not immediately respond to a request for comment. Snap declined to comment.
Slaugther’s comments came a day after President Donald Trump held a White House dinner with several tech executives, including Google CEO Sundar Pichai, Meta CEO Mark Zuckerberg and Apple CEO Tim Cook.
“The president is hosting Big Tech CEOs in the White House even as we’re reading about truly horrifying reports of chatbots engaging with small children,” she said.
Trump has been attempting to remove Slaughter from her FTC position, but earlier this week, U.S. appeals court allowed her to maintain her role.
On Thursday, the president asked the Supreme Court to allow him to fire her from the post.
FTC Chair Andrew Ferguson, who was selected by Trump to lead the commission, publicly opposed the complaint against Snap in January, prior to succeeding Lina Khan at the helm.
At the time, he said he would “release a more detailed statement about this affront to the Constitution and the rule of law” if the DOJ were to eventually file a complaint.
WATCH: FTC Commissioner Rebecca Slaughter on President Trump’s latest attempt to fire her.
Technology
Google leads monster week for tech, pushing megacaps to combined $21 trillion in market cap
Alphabet and Google CEO Sundar Pichai meets with Polish Prime Minister Donald Tusk at Google for Startups in Warsaw, Poland, on February 13, 2025.
Klaudia Radecka | Nurphoto | Getty Images
From the courtroom to the boardroom, it was a big week for tech investors.
The resolution of Google’s antitrust case led to sharp rallies for Alphabet and Apple. Broadcom shareholders cheered a new $10 billion customer. And Tesla’s stock was buoyed by a freshly proposed pay package for CEO Elon Musk.
Add it up, and the U.S. tech industry’s eight trillion-dollar companies gained a combined $420 billion in market cap this week, lifting their total value to $21 trillion, despite a slide in Nvidia shares.
Those companies now account for roughly 36% of the S&P 500, a proportion so great by historical standards that Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, told CNBC by email, “there are no comparisons.”
There was a certain irony to this week’s gains.
Alphabet’s 9% jump on Wednesday was directly tied to the U.S. government effort to diminish the search giant’s market control, which was part of a years-long campaign to break up Big Tech. Since 2020, Google, Apple, Amazon and Meta have all been hit with antitrust allegations by the Department of Justice or Federal Trade Commission.
A year ago, Google lost to the DOJ, a result viewed by many as the most-significant antitrust decision for the tech industry since the case against Microsoft more than two decades earlier. But in the remedies ruling this week, U.S. District Judge Amit Mehta said Google won’t be forced to sell its Chrome browser despite its loss in court and instead handed down a more limited punishment, including a requirement to share search data with competitors.
The decision lifted Apple along with Alphabet, because the companies can stick with an arrangement that involves Google paying Apple billions of dollars per year to be the default search engine on iPhones. Alphabet rose more than 10% for the week and Apple added 3.2%, helping boost the Nasdaq 1.1%.
Analysts at Wedbush Securities wrote in a note after the decision that the ruling “removed a huge overhang” on Google’s stock and a “black cloud worry” that hung over Apple. Further, they said it clears the path for the companies to pursue a bigger artificial intelligence deal involving Gemini, Google’s AI models.
“This now lays the groundwork for Apple to continue its deal and ultimately likely double down on more AI related partnerships with Google Gemini down the road,” the analysts wrote.
Mehta explained that a major factor in his decision was the emergence of generative AI, which has become a much more competitive market than traditional search and has dramatically changed the market dynamics.
New players like OpenAI, Anthropic and Perplexity have altered Google’s dominance, Mehta said, noting that generative AI technologies “may yet prove to be game changers.”
On Friday, Alphabet investors shrugged off a separate antitrust matter out of Europe. The company was hit with a 2.95-billion-euro ($3.45 billion) fine from European Union regulators for anti-competitive practices in its advertising technology business.
Broadcom pops
While OpenAI was an indirect catalyst for Google and Apple this week, it was more directly tied to the huge rally in Broadcom’s stock.
Following Broadcom’s better-than-expected earnings report on Thursday, CEO Hock Tan told analysts that his chipmaker had secured a $10 billion contract with a new customer, which would be the company’s fourth large AI client.
Several analysts said the new customer is OpenAI, and the Financial Times reported on a partnership between the two companies.
Broadcom is the newest entrant into the trillion-dollar club, thanks to the company’s custom chips for AI, already used by Google, Meta and TikTok parent ByteDance. With Its 13% jump this week, the stock is now up 120% in the past year, lifting Broadcom’s market cap to around $1.6 trillion.
“The company is firing on all cylinders with clear line of sight for growth supported by significant backlog,” analysts at Barclays wrote in a note, maintaining their buy recommendation and lifting their price target on the stock.
For the other giant AI chipmaker, the past week wasn’t so good.
Nvidia shares fell more than 4% in the holiday-shortened week, the worst performance among the megacaps. There was no apparent negative news for Nvidia, but the stock has now dropped for four consecutive weeks.
Still, Nvidia remains the largest company by market cap, valued at over $4 trillion, with its stock up 56% in the past 12 months.
Microsoft also fell this week and is on an extended slide, dropping for five straight weeks. Shares are still up 21% over the last 12 months.
On the flipside, Tesla has been the laggard in the group. Shares of the electric vehicle maker are down 13% this year due to a multi-quarter sales slump that reflects rising competition from lower-cost Chinese manufacturers and an aging lineup of EVs.
But Tesla shares climbed 5% this week, sparked mostly by gains on Friday after the company said it wants investors to approve a pay plan for Musk that could be worth up to almost $1 trillion.
The payouts, split into 12 tranches, would require Tesla to see significant value appreciation, starting with the first award that won’t kick in until the company almost doubles its market cap to $2 trillion.
Tesla Chairwoman Robyn Denholm told CNBC’s Andrew Ross Sorkin the plan was designed to keep Musk, the world’s richest person, “motivated and focused on delivering for the company.”
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