Vinod Khosla is looking at this metric to gauge if we're in an AI bubble

Vinod Khosla, the prominent venture capitalist, has revealed his perspective on determining whether the artificial intelligence sector is experiencing a bubble. In a recent episode of OpenAI's podcast, Khosla emphasized that traditional indicators like stock prices are misleading. "Many people mistakenly equate bubbles with stock prices, which are swayed by investors' emotions of fear and greed," Khosla explained. Instead, he focuses on the number of API calls as a more reliable metric. API calls, or Application Programming Interface calls, occur when one software application communicates with another to exchange data or initiate actions. This metric has become increasingly relevant in the context of AI systems. Khosla likened the current situation in AI to the dot-com bubble of the 1990s, where he monitored internet traffic as a gauge of industry health. He argued that if API calls are the primary measure of AI's practical application and demand, one would not witness a bubble reflected in these numbers. The venture capitalist also dismissed concerns about stock market fluctuations, stating, "What Wall Street does with these metrics is largely irrelevant to me." As discussions about potential overvaluation in the AI sector intensified, the term "AI bubble" saw a remarkable resurgence, with a reported 740% increase in mentions during earnings calls and investor conferences in late 2025 compared to the previous quarter. Industry leaders remain divided on the bubble's validity. Microsoft co-founder Bill Gates expressed that while AI holds immense value, it is still caught in a speculative frenzy. Gates stated in late October, "Some companies will benefit from their investments, while others may find themselves burdened by costly data centers." On the flip side, investor Michael Burry raised alarms about the sustainability of AI investments, suggesting that corporations like Microsoft and Alphabet are squandering resources on technology that may soon be outdated. Nvidia's CEO, Jensen Huang, however, has downplayed these bubble fears. Following Nvidia's emergence as the first company to achieve a $5 trillion market cap, Huang asserted that AI represents a significant evolution in computing rather than mere speculation, highlighting its newfound capabilities in reasoning and generating valuable intelligence.