Wall Street is feeling confident about the AI boom, even as OpenAI CEO Sam Altman cautions that some investors could be “burnt” amid soaring valuations. Major tech firms, including Microsoft, Amazon, Alphabet, and Meta, continue to increase capital spending to meet growing AI demand, but analysts like Wedbush’s Dan Ives and Treasury Partners’ Richard Saperstein emphasize the long-term potential.
Wall Street analysts are confident the artificial intelligence boom still has room to run. Even if Sam Altman, the OpenAI chief executive at the center of it all, appears less confident.
Speaking to reporters over dinner late last week, Altman drew a parallel between today’s AI frenzy and the 1990s dot-com bubble, when internet company valuations spiked dramatically before crashing.
“When bubbles happen, smart people get overexcited about a kernel of truth,” Altman said, in comments reported by The Verge. “If you look at most of the bubbles in history, like the tech bubble, there was a real thing. Tech was really important. The internet was a really big deal. People got overexcited.”
He noted some startup valuations for companies raising hundreds of millions of dollars with only a staff of three were “insane.”
“Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes,” he said. “Is AI the most important thing to happen in a very long time? My opinion is also yes.”
Altman warned that some investors are likely to get “very burnt” as some of the hype unwinds, but maintained that the long-term value created by artificial intelligence will outweigh short-term losses. He also repeated the word “bubble” three times in 15 seconds, joking that the comments were likely to become a headline.
Wedbush’s Dan Ives, however, was undeterred by Altman’s slightly tepid tone. He told Fortune that the “AI Revolution will fuel a tech bull market for the next 2-3 years at least.”
“This is trillions being spent in the buildout of this 4th Industrial Revolution. There could be forth in certain areas of the private market for AI vendors, but ultimately, we do not see this as a bubble. This is a 1996 Moment with a lot more room to go, not a 1999 Moment in our view,” he said in an email.
Richard Saperstein, chief investment officer at Treasury Partners, also shrugged off concerns, noting that large-cap technology stocks remain the market’s driving force.
In a Monday note reported by Barron’s, he wrote that big tech companies “have led the market higher and will continue to dominate market performance,” citing expectations for continued earnings growth, strong reinvestment of cash flows, and the expansion of their global reach.
