Alphabet's Sundar Pichai cautions that 'no company is immune' to a possible AI bubble burst.
Alphabet CEO Sundar Pichai has alerted that the current artificial intelligence (AI) boom could contain some 'irrationality', implying that all companies, including Google, could feel the effects if the AI industry bubble were to burst. In an exclusive interview with BBC News, Pichai reflected on the remarkable expansion AI investment has seen, alongside concerns over the soaring valuations of AI tech firms and significant spending in the burgeoning sector.
Pichai, while expressing confidence that Google could endure a potential slump, emphasized that no organization is entirely insulated from such a bubble. The conversation took place amid heightened scrutiny of the AI market. Alphabet's shares have surged in value, attributing to rising market trust in the search giant's capacity to counter OpenAI and its popular product, ChatGPT.
In the interview conducted at Google's California headquarters, Pichai addressed a range of topics, including energy demands, climate targets adjustment, UK investments, AI model accuracy, and the implications of AI developments on employment. A key point of interest was Alphabet's engagement in producing AI-specialized superchips competing with Nvidia, recently valued at a milestone $5 trillion. Despite the buoying valuations, skepticism persists concerning the intricate network of $1.4 trillion in transactions involving OpenAI, projected to yield minor earnings compared to anticipated investments.
Pichai's statements evoke memories of US Federal Reserve chairman Alan Greenspan's warnings during the 1996 dotcom boom, highlighting the potential for 'irrational exuberance.' While acknowledging that AI investments may experience phases of excess, Pichai suggested that, akin to the Internet's impact, AI's significance is indisputable despite potential investment overshoots.
His remarks resonate with earlier warnings from JP Morgan's Jamie Dimon, advocating patience while acknowledging that some AI investments may result in losses. Nevertheless, Pichai underscored Googleās advantage via its complete 'full stack' approachāencompassing chips, YouTube data, and frontier scienceāputting it in a robust position to weather market shifts.
Alphabet's expanding presence in the UK was also addressed. Recently, the firm committed Ā£5 billion to AI infrastructure and research over the next two years, including advanced research projects tied to its AI unit, DeepMind, based in London. Pichai announced plans for Google to eventually begin training its models in the UK, aligning with government aspirations to establish the UK as a key AI superpower, following the US and China. However, he highlighted the 'immense' energy requirements of AI, which currently stands at 1.5% of global electricity usage, urging for the development of new energy sources and scaling of infrastructure to sustain economic growth.