Bret Taylor, OpenAI board chair and CEO of Sierra, believes AI is in a bubble similar to the dot-com era, but says that’s part of the innovation process.
Quick Summary – TLDR:
- OpenAI board chair Bret Taylor says the current AI hype is a bubble, but a necessary one that fuels innovation.
- He compares it to the dot-com boom, where despite failures, giants like Amazon and Google emerged.
- Taylor remains optimistic that AI will revolutionize the economy, especially through tools like AI agents.
- With AI investment hitting $91 billion in just one quarter, Taylor urges a balance between excitement and realism.
What Happened?
Bret Taylor, chairman of the board at OpenAI and CEO of AI startup Sierra, confirmed in a recent interview that he believes artificial intelligence is currently experiencing a bubble. However, he sees this moment not as a cause for panic, but as a natural phase of major technological transformation, much like the internet boom of the late 1990s.
Speaking to The Verge, Taylor echoed sentiments by OpenAI CEO Sam Altman, saying that while many investors might lose money, the long-term economic impact of AI will be massive.
AI Hype Feels Like 1999 All Over Again
Taylor’s candid comments drew a parallel between today’s AI investment climate and the dot-com bubble of the late 90s. Just like back then, the market is seeing skyrocketing valuations, a surge in new startups, and high expectations that may not all pan out.
- Taylor said, “I think both are absolutely true at the same time. There’s a lot of historical precedent for both.”
- He added that while the bubble will burst for some, real value and innovation will survive and thrive.
This perspective is especially relevant given OpenAI’s own status, with reports of the company aiming for a $150 billion valuation, backed by $13 billion from Microsoft.
Why This Bubble Might Be Good?
Unlike the doom-and-gloom often associated with economic bubbles, Taylor views the current AI frenzy as a positive accelerator for technological progress. He highlighted that bubbles often drive experimentation, and that energy tends to lead to disruptive companies that stick around long after the hype fades.
- According to Taylor, AI agents, like those developed by his company Sierra, could revolutionize industries.
- He sees potential beyond basic productivity, predicting trillion-dollar markets in areas like software-as-a-service and enterprise automation.
The Bigger Picture on AI Investment
Investors are currently pouring unprecedented amounts into AI. In just the second quarter of 2025, funding for AI companies reached a staggering $91 billion, a figure that has raised eyebrows among analysts and skeptics alike.
Some experts fear a sharp correction is coming, but Taylor’s take is more nuanced. He acknowledged that while a reset is possible, the underlying tech is solid. Improvements in algorithms, hardware, and data availability mean AI’s core is not just hype, but grounded in real, scalable innovation.
Human Impact and Honest Reflections
Beyond economics, Taylor offered personal reflections on how AI is changing what it means to work in tech. He described AI tools like ChatGPT as an “Iron Man suit”, boosting human abilities rather than replacing them. Still, he admitted the rapid pace of change has left him questioning his own skills as a programmer.
His honesty adds a human layer to a high-stakes conversation that is often framed purely in dollars and market share.
SQ Magazine Takeaway
I think Bret Taylor is spot on. This AI bubble might be loud and messy, but it is also necessary. Just like the dot-com crash gave us the digital giants we rely on today, this wild AI phase could lead to breakthroughs we can’t even imagine yet. Yeah, some companies will vanish and money will be lost, but the survivors will shape the future of work, business, and daily life. I say let the bubble run its course, as long as we keep an eye on what truly matters: innovation that solves real problems.
