'No Company Is Going To Be Immune': Google Boss Sundar Pichai On Impact Of AI Bubble Bursting

Sundar Pichai, the CEO of Google's parent company, Alphabet, has acknowledged there is some "irrationality" in the current artificial intelligence (AI) boom. With companies across the globe rushing to adopt AI systems to cut costs and boost profits, the likes of Google, with its Gemini chatbot and investment in AI chips, as well as competitors like OpenAI and Microsoft, have poured billions into perfecting the technology.

Marshalled by Pichai, Alphabet's shares have doubled in the last seven months to $3.5 trillion, primarily due to the AI wave, but experts have warned that the soaring valuations could be a result of a complex 'financial engineering' that has led to an AI bubble.

Quizzed if Google would be able to weather the storm if the AI bubble were to burst, Pichai issued a warning: "I think no company is going to be immune, including us."

He added: "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."

"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."

The term bubble describes a market phase where speculative buying drives up the value of assets, such as company stock, to levels that far exceed their worth. This unsustainable growth inevitably ends with the bubble bursting, as it happened during the dot-com crash in 2000, when inflated internet company valuations collapsed.

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AI Bubble

Pichai is not the only tech leader to talk about the AI bubble in recent months. During OpenAI's DevDay last month, CEO Sam Altman admitted that certain parts of AI technology were indeed 'bubbly'.

"I know it's tempting to write the bubble story. In fact, there are many parts of AI that I think are kind of bubbly right now," said Altman.

Similarly, Amazon boss Jeff Bezos said there is an 'industrial bubble' with AI having the power to change every industry. "This is kind of an industrial bubble as opposed to financial bubbles," said Bezos, who also explained the difference between an industrial and banking bubble.

"The banking bubble, the crisis in the banking system, that's just bad, that's like 2008. Those bubbles society wants to avoid. The ones that are industrial are not nearly as bad, they can even be good. Because when the dust settles and you see who are the winners society benefits from those inventions," he said.