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Is the AI market in a bubble? That question has been on a lot of people’s minds lately. Investors and economists are concerned that the stock market could be overheating, led by AI and tech companies being overvalued, which may put us at risk of reliving the 2000s dot com bubble burst. (The S&P 500 is priced at about 30 times earnings–but tech stocks are trading an average of 41 times earnings and 10 times sales, Forbes reported.) Not helping matters is OpenAI’s CEO Sam Altman, who recently said he believes we’re in a bubble and that some overexcited investors could get burned. Plus, a recent MIT study found 95% of AI pilots at enterprises fail to create measurable savings or boost profits. Despite investing $30 billion to $40 billion in generative AI, businesses that lack the technical expertise to extract the most from AI have only been able to get subpar returns. While there are some signs that AI use can boost productivity, that hasn’t yet impacted the bottom line.

There’s no denying AI’s potential to create value and transform industries, but some of the buzziest AI companies still haven’t been able to turn a profit. That hasn’t stopped them from raising massive investments at sky-high valuations

Sarah Guo, founder and managing partner at Conviction Partners, said........

© Forbes