Editor's take: Another Big Tech executive has admitted the AI market is in a bubble fueled by "irrational" investment. Overhype and the belief that unproven technology can solve all the world's problems are creating a situation where no company – not even Google – will be immune when it all comes crashing down.
Alphabet CEO Sundar Pichai says the AI market is experiencing clear signs of overexuberance, with some investment driven more by hype than fundamentals. Speaking exclusively to the BBC, he called the surge in funding an "extraordinary moment" while acknowledging elements of investor irrationality – a view echoed by OpenAI CEO Sam Altman back in August.
Pichai said the tech industry can "overshoot" in cycles of enthusiasm, with investments sometimes running ahead of underlying fundamentals. Despite the froth, he stressed that the technology itself remains transformative, reshaping how people work and interact digitally, equating it to the dot-com boom.
"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. It's fundamentally changed how we work digitally as a society. 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 CEO admits that a crash will affect every company in the industry, including Google. However, the search giant's integrated approach – spanning custom AI chips, data platforms like YouTube, and proprietary models – acts as a buffer against market turbulence. Like Altman, Pichai believes Google will weather an AI crash that analysts say is inevitable. This full-stack model positions Alphabet to absorb volatility better than companies that rely on external technologies or partnerships.
Pichai also outlined the company's significant UK expansion, committing £5 billion over two years to research and infrastructure, including work at DeepMind in London. For the first time, Google plans to train AI models within the UK, a step that aligns with the government's ambitions to establish the country as a top-tier AI hub.
Artificial intelligence's impact on workforces is equally profound, Pichai said. Just as the internet changed how we work, AI will transform the industry, eliminating some jobs while creating others. Success will favor those who adopt and integrate AI tools into their professions.
"It doesn't matter whether you want to be a teacher or a doctor," Pichai said. "All those professions will be around, but the people who will do well in each of those professions are people who learn how to use these tools."
The rapid growth of AI also carries an environmental cost. Pichai noted that AI consumed one and a half percent of global electricity last year, straining energy systems. He warned that failing to scale energy infrastructure could constrain economic growth. Alphabet remains committed to reaching net zero by 2030 through investment in new energy technologies, even though progress toward the company's climate targets has slowed.
Sundar Pichai says AI boom shows irrational investment, but Google can weather the coming storm
