"Both Rational and Irrational Elements Exist in AI Investment"
Sundar Pichai, CEO of Alphabet, Google's parent company, warned on November 18 that there are "irrational elements" in the current artificial intelligence (AI) investment frenzy and that all companies would be affected if the bubble bursts.
In an interview with the BBC that day, Pichai said that while the surge in AI investment is a "tremendous moment," there are certain "irrational elements" in the current AI boom. The BBC pointed out that this remark is reminiscent of former Federal Reserve Chairman Alan Greenspan's warning of "irrational exuberance" during the dot-com boom in 1996.
When asked whether Google could be immune to the impact of an AI bubble burst, Pichai stated that while the company may be able to weather a potential storm, "no company, including us, will be immune."
He described AI as "the most profound technology" humanity has developed and emphasized that "we will have to overcome social disruption." He added, "AI will evolve and transform certain jobs, and people will have to adapt to this. Whatever the profession-teachers, doctors, or others-those who learn to use and adapt to these tools will do better."
Pichai's comments come amid a surge in big tech company valuations and growing concerns about a stock market bubble fueled by massive AI investment spending in recent months. Previously, Jamie Dimon, CEO of JPMorgan Chase, warned last month that while AI investments will yield results, some of the capital poured into the industry "will likely be lost."
Recently, Alphabet's stock price has doubled in just seven months on expectations of AI development achievements, pushing its market capitalization to about $3.447 trillion. Since the beginning of this year, the share price has soared by approximately 46%. Last weekend, Warren Buffett's Berkshire Hathaway made a rare move by acquiring shares in Alphabet, a tech stock, resulting in Alphabet's share price rising more than 3% even as other big tech stocks fell the previous day.
In September, Alphabet announced it would invest 5 billion pounds over two years in UK AI infrastructure and research. This includes investments in a new data center and in DeepMind, its London-based AI research lab.
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