In a candid conversation with the BBC on November 18, Alphabet and Google CEO Sundar Pichai acknowledged that the artificial intelligence market faces potential bubble risks that could impact even technology giants like his own company. The Indian-born executive provided a balanced perspective on both the challenges and opportunities in the rapidly evolving AI landscape.
The Reality of AI Investment Cycles
Sundar Pichai didn't shy away from addressing the elephant in the room - the possibility of an AI market bubble. "No company would be immune," Pichai stated clearly when asked if Google could withstand an AI bubble burst. He pointed to what he called "irrational exuberance" in the market that could potentially lead to a correction.
However, the Google CEO was quick to contextualize this concern within broader investment patterns. "We go through these investment cycles, there are moments we overshoot," he explained, drawing parallels with historical technology revolutions rather than dismissing AI as a passing trend.
Massive Financial Commitment to AI Infrastructure
The scale of investment in artificial intelligence has reached staggering proportions, as revealed by Pichai's numbers. "Four years ago, we were spending less than $30 billion per year. This year that number is going to be over $90 billion," he disclosed during the interview.
Perhaps even more impressive is the collective industry investment. Pichai noted that "well over a trillion dollars of investment" is currently flowing into building AI infrastructure across all technology companies. This represents an unprecedented acceleration in technological development, with what companies built over the past 10-20 years now being constructed in just the next couple of years.
Google's Strategic Positioning in AI Landscape
Despite acknowledging that no company would be completely protected from an AI market correction, Pichai expressed confidence in Google's strategic approach. "We are better positioned for many years," he asserted, pointing to the "deeply differentiated approach to AI" that the company has adopted.
One of Pichai's first significant moves as CEO was shifting Google to an "AI first" approach. He described this as a "full stack approach" that encompasses everything from the underlying physical infrastructure to advanced research and product deployment. This comprehensive strategy, according to Pichai, enables Google to "invest at scale and make it work across all these products and businesses."
Investor Concerns and Market Signals
Pichai's comments arrive at a crucial moment when investors are growing increasingly cautious about technology valuations. The concern centers around the trillions of dollars being poured into AI-related commitments, including advanced chips and massive data centers.
Recent market activities have amplified these worries. In a significant development, Peter Thiel's hedge fund completely exited its position in Nvidia, selling approximately 537,742 shares worth around $100 million as of September 30, 2025. This move was disclosed in a November 14 regulatory filing with the US SEC.
Similarly, Masayoshi Son's SoftBank Group Corp announced on November 11 that it had sold its entire stake in Nvidia, realizing $5.83 billion from the transaction. Interestingly, SoftBank has maintained its investments in Sam Altman-led OpenAI, indicating a more selective approach to AI investments rather than a complete withdrawal from the sector.
Adding to the cautious sentiment, Warren Buffett's Berkshire Hathaway, often seen as an economic bellwether, is currently sitting on record cash reserves instead of making new investments. This conservative stance from one of the world's most respected investors has heightened concerns about potential overvaluation in the technology sector.
Despite these warning signs, Alphabet shares have performed exceptionally well, surging about 46% in 2025. In a notable vote of confidence, even the typically tech-shy Berkshire Hathaway acquired a $4.93 billion stake in Alphabet, suggesting that some seasoned investors see long-term value despite short-term concerns.
The Internet Comparison: A Lesson from History
Pichai drew an important parallel between the current AI revolution and the early days of the internet. "Collectively as an industry, we can look back at the internet right now and there was clearly a lot of excess investment," he observed. "But none of us would question whether the internet was profound or fundamentally changed how we work digitally as a society. I expect the AI to be the same."
This historical perspective allows for both acknowledgment of potential short-term irrationality while maintaining faith in the technology's long-term transformative potential. Pichai summarized this balanced view by stating, "So I think it's both rational and there are elements of irrationality."
Key Takeaways from Pichai's Assessment
The Google CEO's message contains several crucial insights for investors, technology professionals, and market observers:
- The AI market shows signs of potential bubble conditions with irrational investment cycles
- No company, including Google, would be completely immune from an AI bubble burst
- Despite short-term risks, AI's fundamental impact is expected to be as profound as the internet
- Google's comprehensive AI strategy positions it well for long-term success
- Current investment levels in AI infrastructure are unprecedented and accelerating rapidly
As investors await Nvidia's Q3 results due on November 19, the entire industry recognizes that the chipmaker's performance and demand pipeline could serve as a crucial indicator for the health of the AI sector. Pichai's nuanced perspective provides valuable context for understanding both the excitement and the caution surrounding artificial intelligence's explosive growth.
