Sundar Pichai Cautions on AI Hype and Market Risks

Published: 18 November 2025 Tuesday . The English Chronicle Desk. The English Chronicle Online

In an exclusive interview with BBC News, Sundar Pichai, CEO of Alphabet, the parent company of Google, has warned that no company would be immune if the artificial intelligence (AI) investment boom were to collapse.

Speaking from Google’s California headquarters, Pichai described the rapid growth of AI as an “extraordinary moment” in technology history, but he also acknowledged that there was some “irrationality” accompanying the current boom.

“There’s no question that AI is profound and transformative, but like any investment cycle, there are periods of overshoot,” Pichai said. “We can look back at the internet right now. There was clearly a lot of excess investment during that era, but no one would question whether the internet changed the world. I expect AI to be the same. It’s both rational and there are elements of irrationality.”

Pichai’s comments come amid rising concerns in Silicon Valley and globally that the AI sector could be experiencing a bubble. The valuations of AI-focused companies have soared over recent months, prompting some analysts to caution that excessive investment may not always yield proportional returns.

Alphabet itself has seen its market value more than double in just seven months, reaching $3.5 trillion (£2.7 trillion). Investors have grown increasingly confident in Google’s ability to compete with rivals such as OpenAI, the company behind the popular ChatGPT models. However, some analysts have voiced skepticism over the massive $1.4 trillion of deals circulating around AI ventures, particularly as OpenAI’s revenue for the year is projected to be only a tiny fraction of the investments made.

“Every company in this ecosystem would feel the impact if the AI market contracts,” Pichai warned. “Even a company like Google, with our diversified portfolio and vertical integration, is not immune. That’s a reality everyone must understand.”

Pichai highlighted what he described as Google’s “full-stack” approach to AI as a key differentiator. Unlike other firms that may rely on external suppliers for components of their AI infrastructure, Alphabet controls multiple layers of technology, including its own AI chips, cloud computing resources, YouTube and search data, and cutting-edge research in frontier sciences. This integrated model, Pichai argued, would allow the company to weather potential market volatility better than competitors with narrower technology stacks.

“Our ability to innovate end-to-end, from chips to models to application platforms, is a strength,” he said. “It positions us to continue advancing AI responsibly, even if there’s a period of market correction.”

This perspective mirrors that of many technology executives who point to the lessons of the dotcom boom of the late 1990s. Alan Greenspan, then-chairman of the US Federal Reserve, famously warned of “irrational exuberance” during the internet investment surge, years before the 2000 market crash. Pichai acknowledged the parallel, suggesting that some degree of overenthusiasm is a natural feature of transformative technologies.

“Periods like this tend to be messy,” he said. “There’s excitement, optimism, and sometimes reckless investment. But the underlying technology—AI in this case—has the potential to fundamentally change how we work, communicate, and solve problems. That part is real and enduring.”

Beyond financial concerns, Pichai addressed broader societal and operational questions surrounding AI. The technology, he said, will have far-reaching effects on jobs, energy consumption, and the climate.

“AI is going to change the nature of work,” Pichai said. “Some roles will be automated, others will evolve, and new opportunities will emerge. It’s critical that governments, companies, and society anticipate these shifts and invest in reskilling and education.”

On energy, Pichai acknowledged that AI computation is resource-intensive and could impact corporate sustainability targets. Google, he said, is actively investing in energy-efficient data centers and renewable sources to ensure its AI operations remain environmentally responsible.

The CEO also discussed Alphabet’s investment in the UK and Europe, emphasizing the importance of international collaboration in AI development. “We’re committed to working with policymakers and researchers across the globe to ensure AI is developed safely and ethically,” he said.

Pichai’s warnings are consistent with broader concerns voiced by financial leaders. Jamie Dimon, CEO of JP Morgan, told the BBC last month that AI investment is likely to yield substantial long-term benefits, but he cautioned that some money would inevitably be lost. “There’s a real risk that some AI ventures won’t survive the next five years,” Dimon said, adding that careful evaluation and due diligence are critical for investors.

Analysts in Silicon Valley have noted that the rapid influx of capital into AI companies may not always correlate with actual technological progress or revenue generation. While Google and other established players are developing advanced AI models and supercomputers, smaller start-ups may struggle to scale operations or monetize innovations effectively.

“Valuations are sky-high, but actual profits and deliverables often lag,” said technology analyst Sarah Li from Emkay Global. “A correction in the market could affect venture capital, stock prices, and even consumer confidence in AI applications.”

Pichai also stressed that Alphabet is focused on responsible AI deployment. The company has faced scrutiny over model accuracy, misinformation, and bias in AI outputs. Pichai said these concerns underline the importance of rigorous testing and transparent reporting.

“We are investing heavily in verification, safety, and user trust,” he said. “AI is powerful, but with power comes responsibility. Companies must act carefully to avoid unintended harm and maintain public confidence.”

He added that Alphabet’s AI strategy involves iterative development with feedback loops and close monitoring of real-world outcomes. “We’re learning, adjusting, and evolving constantly. It’s part of building sustainable AI that benefits everyone.”

Despite the cautionary notes, Pichai remained optimistic about the future of AI. “This is a moment of extraordinary opportunity,” he said. “Yes, there’s hype, speculation, and investment cycles that may overshoot, but the fundamental change AI brings is profound. It will transform industries, improve productivity, and create solutions to problems that were previously unsolvable.”

Investors and technology watchers will be paying close attention in the coming months to see whether AI’s meteoric rise continues or if a market correction occurs. Alphabet’s own approach, combining technological integration with financial prudence, may serve as a blueprint for others seeking stability in a rapidly evolving sector.

In the end, Pichai’s message was clear: the AI revolution is unavoidable, but navigating its economic and societal impact will require prudence, foresight, and collaboration. “No company is isolated from the risks,” he said. “But those that invest thoughtfully, innovate responsibly, and maintain a long-term perspective will be best positioned to thrive.