Google boss Sundar Pichai admitted that he sees some “irrationality” driving the artificial intelligence boom – and warned that “no company” would emerge unscathed if the bubble bursts.
Pichai – whose company has teed up $93 billion in capital expenditures this year alone as it boosts development of the fledgling technology – flagged the risk to markets amid a raging debate on Wall Street about whether AI companies are overvalued.
“Given the potential of this technology, the excitement is very rational,” Pichai told the BBC in an interview published Tuesday. “It’s also true, when we go through these investment cycles, there are moments we overshoot collectively as an industry.”
The Google CEO drew some parallels between current market conditions around AI investment and the internet boom in which valuations of early tech companies soared until the so-called “dot-com bubble” burst in 2000.
“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,” Pichai 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.”
When asked how Google could handle the potential bursting of the AI bubble, Pichai said the company was prepared but admitted, “no company is going to be immune, including us.”
Pichai also spoke glowingly about AI’s potential to reshape the economy for the better – even as he acknowledged it was likely to cause labor upheaval including job losses as businesses adopt AI technology.
Tech stocks have been especially volatile during a recent downturn in US markets.
The tech-heavy Nasdaq composite was trading about 1% lower on Tuesday, while the Dow Jones Industry Average was on pace for its fourth-straight losing session while shedding about 300 points, or roughly 0.7%.
So far, Google has remained resilient, with shares surging about 50% since the start of the year.
Signs of panic emerged this week following revelations that billionaire tech investor Peter Thiel had dumped his entire stake in key chip maker Nvidia.
That came just days after Japanese investment giant Softbank sold off all of its Nvidia holdings.
Nvidia’s stock is seen as key bellwether because other tech giants rely heavily on its advanced AI computer chips to power their models.
Nvidia shares have fallen more than 9% since the start of the month.
Investors will be watching closely when the company reports third-quarter earnings on Wednesday.
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