Altman Warns AI Market Bubble Risks Amid Overheated Tech Valuations

Sam Altman, CEO of OpenAI, has warned that the artificial intelligence sector is experiencing signs of a market bubble, with investors showing “overexcited” interest despite uncertain profit outlooks and rising competition [1]. In a brief but impactful moment during a press event, Altman used the word “bubble” three times within 15 seconds, then urged reporters not to write about it—only to see the topic dominate headlines [1]. His comments have sparked a broader conversation about whether the current AI-driven stock rally resembles a classic speculative bubble or is simply a well-founded response to groundbreaking technology.

From a fundamental perspective, Altman’s concerns do not necessarily indicate a classic bubble in the way of the tulip mania or the 2008 housing crisis [1]. OpenAI is not a speculative asset with no tangible value. According to JPMorgan’s Brenda Duverce, OpenAI has achieved $13 billion in annual recurring revenue, with 700 million weekly active users and over 5 million paying business users [1]. These figures suggest a strong, growing business. Moreover, the company is reportedly on track for a secondary market transaction that could push its valuation to $500 billion, making it the most valuable private company in the world [1].

However, from a technical standpoint, the valuation of tech stocks—particularly those of the Magnificent 7—does appear to be overheated [1]. The Magnificent 7 now account for nearly 40% of the S&P 500’s total value, despite representing just 2% of its component companies. This concentration raises concerns about market resilience and diversification. As Bloomberg’s John Authers noted, it is “unheard of” for such a small group of companies to exert such a dominant influence over the broader index [1]. Bespoke Investment Group further highlighted the disparity, showing that while the Mag 7 has surged 2,800% since 2015, the rest of the S&P 500 has gained only 129% [1].

Goldman Sachs’ David Kostin reported that the Magnificent 7 saw a 26% year-on-year increase in earnings per share during Q2, which indicates real financial momentum [1]. Yet, this growth is not evenly distributed across the broader market. Apollo Management observed that the contribution to U.S. GDP growth from data center spending now matches that of consumer spending, but this shift reflects a decline in consumer spending rather than a sustainable economic expansion [1].

UBS has also expressed caution, reportedly warning about the risks of a private credit-fueled AI boom, echoing Altman’s concerns that the sector is overheating [6]. This alignment between a prominent financial institution and a leading AI figure adds weight to the argument that investors should be wary of overvaluation [6].

While the market has not yet shown signs of a major pullback, some analysts suggest that opportunities may still exist in less speculative areas of the AI sector [8]. However, the growing consensus is that investors should remain cautious. The Nasdaq-100 ETF (QQQ), which includes many of the largest AI-driven technology firms, has become a key indicator of investor sentiment [3]. As the debate continues, the market is likely to remain in a watch phase, with the ETF serving as a bellwether for investor confidence in AI-driven growth [2].

Source:

[1] Sam Altman might be right: He’s not the only one who thinks the stock market is in ‘bubble’ territory

https://fortune.com/2025/08/19/sam-altman-stock-market-bubble-ai/

[2] OpenAI CEO Sam Altman says an AI bubble is forming

https://qz.com/sam-altman-ai-bubble-open-ai-warning

[3] Is AI Market Forming A Bubble? Nasdaq-100 ETF In Focus

https://www.barchart.com/story/news/34241537/is-ai-market-forming-a-bubble-nasdaq-100-etf-in-focus

[4] OpenAI's Altman says AI bubble exists but its importance ...

https://seekingalpha.com/news/4486515-openais-altman-says-ai-bubble-exists-but-its-importance-remains-real-report

[5] UBS Reportedly Cautions Private Credit-Fueled AI Boom ...

https://stocktwits.com/news-articles/markets/equity/ubs-private-credit-ai-boom-overheating-sam-altman-ai-bubble/chsOSfKRdXl

[6] Is the AI industry in a bubble, as OpenAI CEO says?

https://www.cnbc.com/2025/08/19/cnbc-daily-open-is-the-ai-industry-in-a-bubble-as-openai-ceo-says.html