Google CEO Sundar Pichai has issued one of the most candid warnings yet about the state of the artificial intelligence (AI) market, cautioning that no company, including Google itself, would be immune if the current AI investment surge collapses into a bubble.
Speaking at Google’s Mountain View headquarters in California, Pichai acknowledged that while AI is driving a transformative period in technology, the scale and pace of investment are exhibiting clear signs of “irrationality” across the sector.
Silicon Valley, he noted, is experiencing financial dynamics reminiscent of the dot-com boom preceding the 2000 crash, with valuations outpacing real-world adoption. Nevertheless, he emphasized that such cycles are typical during periods of technological revolution.
“We can look back at the internet right now. There was clearly a lot of excess investment, but none of us today 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 whether Alphabet could withstand a potential market crash, Pichai responded candidly: “I think no company is going to be immune, including us.”
His remarks come as Alphabet’s valuation has doubled in just seven months, reaching $3.5 trillion, driven by investor optimism over the company’s AI model advancements and new specialised chips competing with Nvidia’s market-leading hardware. Nvidia recently became the first company in history to reach a $5 trillion valuation, largely due to demand for AI chips, stoking concerns of market overheating.
Financial analysts have also raised alarms over the $1.4 trillion in layered deals involving OpenAI, despite the company’s expected 2025 revenue representing only a fraction of that figure. Experts warn that any slowdown, missed revenue targets, or regulatory challenges could ripple across the broader AI ecosystem.
Pichai indirectly addressed these concerns, noting that the sector must prepare for “overshoots” and corrections. Despite potential turbulence, he argued that Alphabet is structurally positioned to weather shocks due to its control over the full AI stack—from data sources such as YouTube, to chip production, model training infrastructure, and frontier research labs.
“We own the full stack,” he said, emphasizing that this integrated approach provides a competitive advantage and greater resilience compared to AI-focused startups burning capital at unsustainable rates. However, he stressed that even this advantage cannot fully protect any company from a market-wide correction.
Pichai also highlighted Alphabet’s expanding commitment to the UK, a country aiming to become a global AI hub. Google recently announced a £5 billion investment in the UK’s AI ecosystem, including infrastructure development, research expansion, and new phases of model training on British soil.
“We are committed to investing in the UK in a pretty significant way,” Pichai said, describing the country as a long-term strategic partner.
On the global energy implications of AI, Pichai warned that AI systems consumed 1.5% of the world’s electricity in 2024—a figure expected to rise sharply as generative AI adoption grows. “You don’t want to constrain an economy based on energy,” he said, urging governments to scale up power generation and grid infrastructure. He admitted that Google’s rapid AI expansion has delayed some of the company’s climate and sustainability targets, though Alphabet remains committed to achieving net-zero emissions by 2030.
Regarding employment, Pichai described AI as “the most profound technology” humanity has ever built, capable of transforming industries including teaching, medicine, law, and media. “It will evolve and transition certain jobs, and people will need to adapt,” he said. Those who adopt AI tools, he added, “will do better,” while those who fail to adapt may face economic disadvantages. Pichai also predicted entirely new job categories would emerge, similar to how the internet created industries unknown in the 1990s.
The interview underscores mounting scrutiny of the AI sector, as regulators in the U.S., Europe, and Asia examine everything from data practices to market concentration. Pichai’s comments are among the clearest acknowledgments by a leading tech executive that the AI market may be overheating.
