On Tuesday, Alphabet CEO Sundar Pichai warned of “irrationality” in the AI market, telling the BBC in an interview, “I think no company is going to be immune, including us.” His comments arrive as scrutiny over the state of the AI market has reached new heights, with Alphabet shares doubling in value over seven months to reach a $3.5 trillion market capitalization.
Speaking exclusively to the BBC at Google’s California headquarters, Pichai acknowledged that while AI investment growth is at an “extraordinary moment,” the industry can “overshoot” in investment cycles, as we’re seeing now. He drew comparisons to the late 1990s Internet boom, which saw early Internet company valuations surge before collapsing in 2000, leading to bankruptcies and job losses.
“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.”
Over the past year, some analysts and tech industry critics have expressed increasing skepticism about a web of $1.4 trillion in deals surrounding Google competitor OpenAI in particular. The company has committed to spending $1.4 trillion on infrastructure over eight years, while it expects to generate around $13 billion in revenue this year. OpenAI CEO Sam Altman told reporters at a private dinner in August that investors are “overexcited” about AI models and that “someone” will lose a “phenomenal amount of money.”
Reacting to the Pichai comments, prominent AI industry critic Ed Zitron told Ars Technica, “I think that this is the first moment where a magnificent 7 feels it’s necessary to be on the right side of history, leaning on the shaky talking point of ‘there was a lot of over investment in the Internet too’ because there really isn’t a defense for the—to use his own terminology—‘excess investment’ in AI.” He added, “I imagine others will follow.”