Khosla Ventures founder Vinod Khosla says the pervasive narrative that AI is in a bubble is great for the media but does not necessarily reflect what’s happening under the hood.
In a new interview on The OpenAI Podcast, the billionaire says that looking at stock prices is a largely inaccurate method to determine whether a tech cycle is in a bubble.
According to Khosla, stock values reflect the volatile swings of investor sentiment and have nothing to do with actual demand.
“There’s also this funny notion of a bubble. People equate bubble to stock prices, which have nothing to do with anything other than fear and greed among investors. So I always look at bubbles, which should be measured by the number of API calls. Or in the dot-com bubble, which people refer to, it should be the amount of internet traffic, not by what happened to stock prices because somebody got overexcited or underexcited, and then one day they can go from loving Nvidia to hating Nvidia because it’s overvalued. Those gyrations aren’t reality.”
An API call happens when a user types a question or request, and an app sends the text to an AI model. The model generates a reply and sends it to the app. Data shows that OpenAI’s API calls alone average more than 2.2 billion per day.
Khosla says that focusing on API calls alone clears out all the noise, as it shows the demand and usefulness of AI.
“The reality is the underlying number of API calls. If you look at internet traffic during the dot-com bubble, prices may have gone up violently and gone down violently. There’s no bubble detected in Internet traffic. I would almost guarantee you, you won’t see the bubble in the number of API calls. And if that’s your fundamental metric of what’s the real use of your AI, usefulness of AI, demand for AI, you’re not going to see a bubble in API calls. What Wall Street tends to do with it, I don’t really care. I think it’s mostly irrelevant. Great for press articles because the press has to fill their column inches, but it’s not reality. So prices of things aren’t the reality, or stock prices, or private company valuations. The reality is the actual demand for AI, which is the number of API calls.”
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