Sundar Pichai Warns That No Company Would Be Immune If an AI Bubble Burst
Alphabet chief executive Sundar Pichai said the surge in artificial intelligence investment contains “elements of irrationality” and warned that no company, including Google, would be unaffected if the AI market were to sharply correct. Speaking to BBC News at Google’s California headquarters, he described the current moment as “extraordinary” but acknowledged concerns about the pace and scale of spending in the sector.
Scrutiny Intensifies as AI Valuations Rise at Record Speed
Pichai’s comments come at a time when valuations in the AI industry have reached new highs. Alphabet’s share price has doubled in seven months, pushing its market value to $3.5 trillion as investors express confidence that Google can counter competitive pressure from OpenAI. Alphabet is also investing heavily in specialised AI superchips that compete with Nvidia hardware. Nvidia, run by Jensen Huang, recently became the first company to reach a $5 trillion valuation.
Concerns Grow Over Multi-Trillion-Dollar AI Deal Activity
Some analysts have questioned a network of deals linked to OpenAI that total around $1.4 trillion, despite expectations that the company will generate revenues this year that are a tiny fraction of that figure. The scale of these investments has raised comparisons to the late-1990s dotcom boom, when inflated valuations later collapsed, leading to bankruptcies, job losses, and declines in pension fund values. Pichai said investment cycles can “overshoot,” noting that the tech sector saw similar patterns during the early internet era.
Google Says Its Vertical Integration Strengthens Its Position
Pichai said Google’s structure, which includes in-house development across chips, data from products such as YouTube, and research in core AI science, puts the company in a stronger position to handle market swings. He added that the search giant could endure a downturn but reiterated that the impact would not spare Google entirely.
Interview Addresses Energy Use, Climate Targets, UK Investment, and AI Accuracy
During the wide-ranging interview, Pichai also discussed Google’s energy needs, its updated climate timelines, and the accuracy of its AI models. He addressed the expected effects of AI deployment on employment and commented on ongoing investment plans in the UK. The interview took place as the broader AI sector faces rising scrutiny from regulators, investors, and policymakers.
Recent Warnings Add Pressure to AI Market Optimism
Pichai’s remarks align with comments from JP Morgan chief executive Jamie Dimon, who told the BBC last month that while AI investment would produce returns, some of the capital flowing into the sector would “probably be lost.” Pichai said optimism about AI’s long-term importance coexists with investor behaviour that can appear excessive, echoing former U.S. Federal Reserve chairman Alan Greenspan’s 1996 warning about market “irrational exuberance.”
Featured image credits: Flickr
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