Faisal Islam,economics editor And
Rachel Clune,business reporter
The head of Google’s parent company Alphabet told the BBC that if the AI bubble bursts, every company would be affected.
Speaking exclusively to BBC News, Sundar Pichai said the surge of artificial intelligence (AI) investment has been an “extraordinary moment”, but there is some “irrationality” in the current AI boom.
It comes amid fears beyond Silicon Valley and the bubble as the value of AI tech companies has soared in recent months and companies are spending big on the emerging industry.
Asked whether Google would be immune to the effects of the AI bubble bursting, Mr Pichai said the tech giant could weather that potential storm, but he also issued a warning.
“I think no company, including ours, will be left untouched by this,” he said.
In a wide-ranging exclusive interview at Google’s California headquarters, he also talked about energy needs, slowing climate targets, UK investment, the accuracy of its AI models and the impact of the AI revolution on jobs.
This interview comes at a time when the state of the AI market has never been examined in more depth.
The value of Alphabet’s shares has doubled in seven months to $3.5 trillion (£2.7 trillion) as the market becomes more confident in the search giant’s ability to fend off the threat of ChatGept owner OpenAI.
Alphabet’s particular focus is on the development of specialized superchips for AI to compete with Jensen Huang-run Nvidia, which recently reached a $5tn valuation for the first time in the world.
As valuations rise, some analysts have expressed skepticism about the complex web of $1.4 trillion deals being made around OpenAI, which is expected to generate revenues less than one-thousandth of the planned investment this year.
This has led to fears that stock markets are headed for a repeat of the dotcom boom and bust of the late 1990s. The early 2000s saw the values of early Internet companies rise amid a wave of optimism about the then-new technology, before the bubble burst and many stock prices collapsed.
This led to the closure of some companies, resulting in the loss of jobs. A fall in share prices could also impact the value of people’s savings, including pension funds.
Echoing comments made by US Federal Reserve Chairman Alan Greenspan in 1996, long before the dotcom crash, warning of “irrational exuberance” in the market, Mr Pichai said the industry could “overshoot” in such investment cycles.
He said, “We can look back at the Internet now. There was obviously a lot of investment, but none of us would question whether the Internet was deep.”
“I expect AI to be the same way. So I think it’s both rational and there are elements of irrationality in a moment like this.”
His comments follow a warning from Jamie Dimon, boss of US bank JPMorgan, who told the BBC last month that investment in AI would yield benefits, but some of the money poured into the industry “will likely be lost”.
But Mr Pichai said Google’s unique model of owning its “full stack” of technologies – from chips to YouTube data, models and frontier science – means it is better placed to weather any AI market turmoil.
The tech giant is also expanding in the UK. In September, Alphabet announced it was investing in UK artificial intelligence, committing £5 billion to infrastructure and research over the next two years.
Mr Pichai said Alphabet would develop “cutting-edge” research work in the UK, including at its London-based flagship AI unit DeepMind.
For the first time, he said Google would make a move “over time” which is being pressured by the government to “train our models” in the UK – a move Cabinet ministers believe would cement the UK as the number three AI “superpower” behind the US and China.
“We are committed to investing in the UK in a very significant way,” Mr Pichai said.
However, he also warned about AI’s “exorbitant” energy needs, which accounted for 1.5% of the world’s electricity consumption last year, according to the International Energy Agency.
Mr Pichai said action was needed in other countries, including the UK, to develop new sources of energy and increase energy infrastructure.
“You don’t want to disrupt an energy-based economy, and I think there will be consequences,” he said.
He also acknowledged that the intensive energy needs of its expanding AI enterprise means the company has fallen short of its climate goals, but stressed that Alphabet still has a goal of achieving net zero by 2030 by investing in new energy technologies.
“It will impact the rate at which we were expecting progress,” he said.
AI will also impact work as we know it, with Mr Pichai calling it “the most profound technology” mankind has ever worked on.
“We have to work through social disruptions,” he said, adding that it would also “create new opportunities”.
“It will evolve and change some jobs, and people will need to adapt,” he said. Those who adopt AI will “do better”.
“It doesn’t matter whether you want to be a teacher or not [or] a doctor. All those professions will be around, but the people who will perform well in each of those professions are the people who learn to use these tools.”
