Analysts ease AI bubble fears as Altman warns some investors may be “very burnt”

OpenAI CEO Sam Altman has acknowledged that artificial intelligence is in a bubble, warning that some investors could be left “very burnt.” Despite “insane” valuations and what he called irrational investor behavior, Altman said he intends to keep aggressively spending on infrastructure, predicting OpenAI will pour “trillions” into data centers in the near future.

Altman stressed that AI remains the most important technological shift in decades, even if the sector is overheated. “Are we in a phase where investors are overexcited? Yes. Is AI the most important thing to happen in a very long time? Also yes,” he told reporters.

The comments come as tech giants escalate capital expenditure to meet surging AI demand. Microsoft is targeting $120 billion in spending this year, Amazon has topped $100 billion, Alphabet raised its forecast to $85 billion, and Meta increased its capex guidance to $72 billion.

Analysts, however, argue the current cycle differs from the dotcom bubble. Wedbush’s Dan Ives called the sector only in the “second inning of a nine-inning game,” while Citi’s Rob Rowe highlighted that today’s companies are funding growth with strong cash flows rather than debt.

Alibaba co-founder Joe Tsai has also voiced concern about excessive data center spending, warning earlier this year of a brewing AI bubble. Altman compared the moment to the early internet boom, predicting that while some investors may lose big, the long-term societal impact of AI will be transformative.