Even the CEO of a top AI startup thinks that AI will 'be the biggest bubble of all time'

• The CEO of one of the biggest AI startups warned that AI will "be the biggest bubble of all time."
• Emad Mostaque, the cofounder of Stability AI, compared the hype around the technology to the dot-com bubble, CNBC reported.

Even some of AI's biggest players don't think the craze and money surrounding the technology is going to last.

Stability AI CEO Emad Mostaque told UBS analysts that he thinks AI will "be the biggest bubble of all time," CNBC reported.

"I call it the 'dot AI' bubble, and it hasn't even started yet," the cofounder of the generative AI startup said on the call, according to CNBC.

Mostaque's comments liken the hype around AI to the "dot-com bubble" that unfolded in the late 1990s, during which a crop of new internet-based companies fizzled out after receiving hundreds of millions of dollars of investment.

Investors are eager to put their dollars into AI. In the first quarter or this year, venture firms poured about $1.7 billion into generative AI companies, doubling the total from the same period last year, according to data from Pitchbook.

Mostaque has benefitted from this investment boom. Even before ChatGPT's release to the public, investors funneled over $100 million into Mostaque's Stability AI, which is the developer of the open-source, text-to-image generator Stable Diffusion.

Many other investment and AI experts have commented on the fervor surrounding the industry, with some drawing similar parallels between the AI boom and the dot-com era.

In June, OpenAI CEO Sam Altman said investor interest in AI was "wildly overhyped in the short-term," adding that "there's crazy stuff happening in Silicon Valley right now."

That same month, veteran ESG investor James Penny said that AI's overwhelming appeal to investors "smells very much like the dot-com era." And Michael Hartnett, the chief investment strategist at Bank of America Global Research, said in May that AI is "in a baby bubble." He added that the bubble could burst if the Federal Reserve resumes rate hikes — just like it did in 1999 before the dot-com burst.

But others have been less quick to make the comparison.

Dan Ives, a research analyst at Wedbush Securities, made the distinction in June that AI is currently enjoying a "1995 moment," a nod to the investment surge in internet companies during that year, not a "1999 moment," which is when the dot-com bubble began to burst.

And in May, Wharton finance professor Jeremy Siegel was careful not to prognosticate about the future of AI companies.

"Long term I would say that they were probably slightly overvalued," he told CNBC about AI companies. "But for the short term, we know momentum can carry stocks far higher than their fundamental value and no one can predict how high they might go."