The ongoing surge in artificial intelligence investment and innovation has drawn comparisons to one of the most transformative and volatile periods in modern technology history: the dot-com boom of the late 1990s. For OpenAI chairman Bret Taylor, the parallels are not only striking but instructive.
Speaking on the ACQ2 podcast, Taylor argued that much like the dot-com era, today’s AI wave contains both speculative hype and profound long-term value creation. The challenge, he said, will be separating the “snake oil” from the innovations that will truly redefine business, commerce, and society.
Lessons From the Dot-Com Era
The late 1990s marked a historic period when digital-first companies fueled unprecedented stock market growth. The dot-com bubble inflated valuations of internet startups, many of which collapsed when the bubble burst. Companies like Webvan and eToys.com ended in bankruptcy, while Pets.com became the symbol of overhyped failure.
But alongside the wreckage, lasting giants were born. Amazon, which went public in 1997, survived the crash to become a trillion-dollar titan. Google, founded during the boom, emerged soon after as the defining search engine and advertising powerhouse. Even eBay, another survivor, grew into a global marketplace.
Taylor believes this mix of collapse and resilience offers a blueprint for understanding today’s AI frenzy.
“If you say dot-com, people come back with failures,” Taylor said. “If you look at the S&P 500 now and you look at the amount of value from companies created in that, one could argue that actually almost all of the exuberance and hype was totally warranted.”
AI Mania and Market Momentum
Artificial intelligence has buoyed global markets in much the same way the internet once did. Venture capital firms are pouring billions into AI startups, while Big Tech players are investing tens of billions in infrastructure, talent, and chips.
The stakes are enormous. In July, Nvidia became the first company to hit a $4 trillion market cap, driven by insatiable demand for its GPUs from AI companies and hyperscale cloud providers. Analysts at Morgan Stanley recently projected that AI-driven productivity gains could add as much as $16 trillion to the S&P 500 over time.
This unprecedented capital inflow has led skeptics to sound the alarm. Some warn that AI may represent a bubble larger and more painful than the dot-com collapse. Erik Gordon, a business professor and tech commentator, told Local press that “more investors will suffer than suffered in the dot-com crash, and their suffering will be more painful.”
Even Sam Altman, OpenAI CEO, has openly acknowledged the bubble-like dynamics. At a recent dinner, Altman described AI as a bubble built around “a kernel of truth.”
“Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes,” Altman said. “Is AI the most important thing to happen in a very long time? My opinion is also yes.”
Altman noted that while some startups may waste billions especially those with “three people and an idea” others will create extraordinary wealth and redefine the economy.
Snake Oil or Sustainable Value?
Taylor’s perspective largely aligns with Altman’s. He acknowledges that AI is already flooded with buzzwords, hype, and questionable startups. He even joked about the overuse of terms like “agentic” in investor pitches.
“You have a lot of snake oil,” Taylor said.
But like the internet era before it, AI also has real winners already emerging. ChatGPT reached 100 million users within two months of its app launch and continues to dominate the App Store. For Taylor, this kind of traction demonstrates tangible, lasting consumer value.
He also sees enormous potential in AI-powered B2B software platforms. As an example, he pointed to Lovable, a coding tool that allows businesses to quickly build apps and websites using AI. These enterprise-focused innovations, he argued, are where much of the real value will ultimately be created.
The Big Picture: Echoes of the Past, Signs of the Future
Looking back, the dot-com bubble was both a story of spectacular failures and foundational successes. It reshaped commerce, finance, and daily life in ways few could have predicted during the hype.
AI, Taylor argues, is following a similar trajectory. While not every AI startup will survive, the technology itself is already reshaping markets, businesses, and even geopolitics. From massive investments in AI infrastructure to the rapid rise of tools like ChatGPT, the sector is generating measurable value that will endure long after the speculative capital fades.
The challenge for investors and innovators alike is clear: to distinguish the “Pets.coms of AI” from the next Amazon or Google.
