Vinod Khosla has his eye on one AI metric, and it’s not stock prices.
On an episode of OpenAI’s podcast released on Monday, the famed venture capitalist shared how he’s gauging whether we’re in an AI bubble — or not.
“People equate bubble to stock prices, which has nothing to do with anything other than fear and greed among investors,” he said. “So I always look at, bubbles should be measured by the number of API calls.”
API, or Application Programming Interface calls, refer to the process in which one software application sends a message to another application to request data or to trigger an action. They are a common indicator of digital tools’ use, especially with the rise of AI agents. High API calls can also be a mark of a poor or inefficient product.
Khosla said the bubble shouldn’t be called “by what happened to stock prices because somebody got overexcited or underexcited and in one day they can go from loving Nvidia to hating Nvidia because it’s overvalued.”
The 70-year-old VC, whose notable investments include OpenAI, DoorDash, and Block, compared the AI bubble to the dot-com bubble. He said he looked out for internet traffic as a metric during the 1990s, and with AI bubble concerns, that benchmark is now API calls.
“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,” he said. “What Wall Street tends to do with it, I don’t really care. I think it’s mostly irrelevant.”
Concerns that the AI industry is overvalued because of massive investments became one of the buzziest themes in the second half of 2025. The phrase “AI bubble” appeared in 42 earnings calls and investor conference transcripts between October and December — a 740% increase from the previous quarter, according to an AlphaSense analysis.
Top business leaders remain split about whether the bubble is about to burst.
Microsoft cofounder Bill Gates said AI has extremely high value, but it’s still in a bubble.
“But you have a frenzy,” Gates told CNBC in late October. “And some of these companies will be glad they spent all this money. Some of them, you know, they’ll commit to data centers whose electricity is too expensive.”
Earlier this month, “Big Short” investor Michael Burry raised the alarm on an AI bubble in a Substack exchange.
Burry wrote that companies, including Microsoft and Alphabet, are wasting trillions on microchips and data centers that will quickly become obsolete. He added that their spending has “no clear path to utilization by the real economy.”
Nvidia CEO Jensen Huang has dismissed concerns of a bubble. His company became the world’s first $5 trillion market cap company in October on the back of the AI boom.
In an October Bloomberg TV appearance, Huang said that instead of overspeculation, AI is part of a transition from an old way of computing.
“We also know that AI has become good enough because of reasoning capability, and research capability, its ability to think — it’s now generating tokens and intelligence that is worth paying for,” Huang said.
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