Google CEO warns no tech giant is safe if AI bubble bursts

Alphabet chief Sundar Pichai has admitted that nobody would emerge unscathed if the artificial intelligence spending boom collapses in the future — even Google.

When asked about the effects of a potential AI bubble bursting, which many analysts have predicted in recent months, Pichai told the BBC: “I think no company is going to be immune, including us.”

Pichai added that the current wave of investment in the technology is “an extraordinary moment” but echoed warnings of “irrational exuberance” like that of the dotcom boom. He said the tech industry can “overshoot” in investment cycles.

“We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound,” he said. “I expect AI to be the same. So I think it’s both rational and there are elements of irrationality through a moment like this.”

Pichai’s statement comes amid a growing debate over whether the AI spending boom is sustainable. Many analysts have warned of a bubble, while top Wall Street executives have said there is a drop in valuations coming down the track.

On Tuesday, JP Morgan vice chairman Daniel Pinto warned that there is “probably a correction there,” speaking at a Bloomberg event in South Africa. “That correction will also create a correction in the rest of the segment, the S&P [500] and in the industry.”

Pichai’s comments also echo those of OpenAI boss Sam Altman earlier this year. Altman said: “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes.”

The CEO also said people should approach AI tools such as his company’s Gemini with caution. Pichai said that while AI can be helpful “if you want to creatively write something,” people “have to learn to use these tools for what they’re good at, and not blindly trust everything they say.”

Alphabet shares have more than doubled in value in the last seven months as markets have grown more confident that Google’s AI products are capable of holding their own against market leader ChatGPT. The company’s market cap is now $3.5 trillion.

“We take pride in the amount of work we put in to give us as accurate information as possible, but the current state-of-the-art AI technology is prone to some errors,” Pichai told the BBC.