Is Artificial Intelligence Inflating A Valuation Bubble?

Big fund-raising rounds and high valuations have some wondering whether the AI sector is in a bubble in the nature of the dotcom boom. As of this writing, OpenAI is valued at over $80 billion; Amazon added another $2.75 billion to its investment in Anthropic; and even some very early-stage startups, like France-based Mistral AI, have racked up hundreds of millions in venture-capital funding at valuations over a billion dollars. Alphabet CEO Sundar Pichar has said AI could be more profound than the invention of electricity or the discovery of fire. Is the hype real?

It's too early to tell and we're not market prognosticators. But here are few words of caution. There is a huge range of business models in the AI space. Some are variations on old themes: consumer-facing tools and toys (like chatbots and search engines) that make money from subscriptions (often baited with freemium versions) and advertising dollars. Others are more far-reaching—and more untested—such as