Will ChatGPT repeat the dot-com and crypto crashes?

The hype around ChatGPT has some industry observers warning that artificial intelligence (AI) will bubble and crash like the 2000 dot-com meltdown or crypto collapse.

Will the hunger for "the next big thing" drive investment in ChatGPT and other AI apps to unsustainable heights and quick collapse?

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Two experts say no.

Venture capitalist Jai Das told FOX Business there’s probably a mini bubble around AI language applications, but no bubble around AI.

Das is a co-founder of Sapphire Ventures, an enterprise VC firm specializing in growth and expansion stage companies. He believes the public markets are more rational about AI than they were about cryptocurrency or electric vehicle start-ups.

Bill Haskell agrees. The CEO of Innventure was a managing director at Internet Capital Group, a dot-com VC firm worth $60 billion at its peak. Back then, Haskell told FOX Business that "money was free."

"The market was in this frenzy. Everybody was just jumping into everything they could. IPOs [initial public offerings] were a dime a dozen back in those days."

Haskell’s Innventure aims to build billion-dollar companies by acquiring and commercializing neglected technologies from multinational corporations. He says institutional investors are being cautious about investing in artificial intelligence.

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Hyperscale hegemony

The involvement of hyperscalers including Microsoft, Google, and China’s Baidu will influence investment decisions. Microsoft recently announced a new investment in ChatGPT-maker OpenAI while Google rolled out its Bard AI service and Baidu unveiled a ChatGPT-style "Ernie Bot."

"These guys have been working on this for a long, long time," Haskell told FOX Business. "It won’t be very long before there are 10 ChatGPTs out there that are all competing for the same users and the same space and who knows which one will rise to the top."

Additionally, many AI applications will be built around — or integrate with — existing applications owned by hyperscalers, mitigating demand for new productivity applications. Das cites Google Docs as an example. Integrating AI into Google Docs eliminates the need for a new AI-only document app.

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Haskell believes the AI market will develop in fits and starts until something clicks.

"What will make it go will be some sort of frivolous, consumer, social media thing," he speculates.

Experts cite the internet as an example. The internet was primarily an email tool until browsers literally opened the World Wide Web. "Once the browser came in, everybody’s eyes opened up," Das says.

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ChatGPT IPO?

Das sees a strong pipeline of investment opportunities, primarily in middleware, the software that will train AI to become better. He expects to see "hockey stick" growth in Series A and B funding in a year or so, adding it may take another 6 to 8 years before one of those companies goes public.

Haskell, who has shepherded multiple IPOs, says he wouldn’t be surprised if an AI software platform goes public this year. He notes Chat GPT was recently valued at $29 billion on $80 million of revenue.

"I wouldn’t be surprised if you have a few that jump out, including ChatGPT. If they can get that kind of valuation [$29 billion] in the public marketplace you might see it because they’re going to have to continue to raise capital to evolve the technology and that’s a way to do it."

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Where’s ChatGPT headed?

Both Haskell and Das believe ChatGPT's long-term future lies in its integration into other apps. However,s ChatGPT will not replace humans.

"ChatGPT will live on, but will be embedded in a lot of applications," Das told FOX Business. "It’s very hard for AI to replace human beings. It’s like a digital photograph."

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Haskell uses the example of a self-driving car. 

"There certainly can be an audible component to that. As you’re riding along in an autonomous vehicle — giving it context about where you want to go, and what you want to see — it will start making decisions on your behalf based upon fairly limited input from you.

"It’s not going to be some fleeting fad. There are real meaningful applications for it. Which ones are going to come out and dominate first, it’s hard to predict."

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Just two months after its launch, ChatGPT — which can generate articles, essays, jokes, and even poetry in response to prompts — has been rated the fastest-growing consumer app in history. That has pushed Google owner Alphabet Inc to plan its own chatbot service and use more artificial intelligence for its search engine.

Reuters contributed to this article.