Can you remember the cautionary tones of economists who warned us of “irrational exuberance” during the late 1990s dotcom bubble?
In an interview with BBC, Google CEO Sundar Pichai said something similar. He described today’s AI frenzy as an “extraordinary moment, but one marked by “elements of irrationality”. He also added “no company is going to be immune” if an AI bubble burst!
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How the Dot-Com Caution Echoes in Today’s AI Warnings
In the late 1990s, economists repeatedly warned that markets were being swept up in “irrational exuberance.” The phrase captured a dangerous mood:
- Investors were overhyping internet startups, pouring money into companies with little revenue, no profits, and unproven business models.
- They feared a massive correction, where reality would eventually catch up with speculative valuations.
The concern was that enthusiasm was replacing logic — and it was unsustainable.
Sundar Pichai’s recent warning about an AI bubble sounds strikingly similar.
He says the current AI boom carries a risk of:
- Overvaluation and overexpectation, much like dot-com stocks in the ’90s.
- Younger AI startups raising colossal funds without stable, long-term revenue.
- Big players — including Google itself — being exposed if the bubble pops.
Just as the dot-com bubble burst reshaped the entire tech industry, Pichai cautions that an AI bubble burst could shake every tech firm, not just smaller players.
The Core Parallel
Dot-Com Era: Exuberance exceeded technological maturity.
AI Era: Hype threatens to outrun practical, scalable value.
Both eras show how breakthrough technologies can spark excitement so fast that businesses, investors, and the public start believing every idea will succeed — until the market forces a correction.
The global rush into artificial intelligence has pushed tech valuations to unprecedented highs, with Alphabet’s shares soaring nearly 46 per cent this year. Investors are betting heavily that Google can stand shoulder-to-shoulder with OpenAI’s ChatGPT and a wave of fast-advancing rivals.
But behind the optimism, Sundar Pichai is sounding a note of caution.
‘No company is immune,’ says Pichai
Asked how Alphabet would fare if an AI bubble were to burst, Pichai was unequivocal: “No company is going to be immune, including us.”
While he believes Google could “weather the storm,” he warned that any abrupt correction would ripple across the entire industry.The caution comes as investor and regulatory nerves tighten. In the United States, concerns over overheated AI valuations have begun to weigh on broader markets. UK policymakers, too, have warned of rising bubble risks.
A boom built on real innovation — with irrational edges
Despite the froth, Pichai argues that today’s AI surge reflects a genuine technological turning point. “This is an extraordinary moment,” he said, acknowledging that while there are “elements of irrationality,” the underlying innovation remains substantial.
Also Read: Did You Know 75% of Indian Desk Workers Are Adopting AI to Drive Productivity?
Alphabet doubles down on global AI expansion
Alphabet is pushing forward aggressively. In September, the company announced a £5 billion UK investment spanning new AI infrastructure, a data centre, and further expansion of DeepMind. Pichai also revealed plans to start training advanced models in Britain, supporting the UK’s ambition to become the world’s third major AI superpower after the US and China.
But growth comes at a cost. Pichai warned that AI’s “immense” energy demands could delay Alphabet’s net-zero targets as computing capacity scales.
Tech titans share the same worry
Pichai’s concerns echo those of other industry heavyweights.
OpenAI CEO Sam Altman recently said investors are already “overexcited” about AI, warning that someone will “lose a phenomenal amount of money.”
Jeff Bezos added that when hype peaks, “every experiment gets funded,” making it hard to distinguish good ideas from bad ones — and market corrections become inevitable.
A reminder beneath the euphoria
In this moment of incredible AI race, tech leaders appear aligned on one message: this momentum won’t last forever. Pichai’s warning underscores a broader truth — even transformative technologies can cast long shadows when inflated by hype.
Sujata Bhattacharjee is a professional content writer with eight years of experience crafting SEO-focused articles, tech blogs, ad copies, and B2B content. She blends clear storytelling with data-driven strategy to create content that ranks, engages, and converts. Sujata has worked for startups, agencies, big tech firms like Cigniti, and established brands, helping them simplify complex ideas and communicate with impact.