Google CEO Says AI Boom Contains Both Rational and Irrational Elements

Google CEO Sundar Pichai told BBC News that the artificial intelligence (AI) boom contains both rational and irrational elements.

Pichai said the tech industry can “overshoot” during investment cycles like the one currently happening with AI, the BBC reported Tuesday (Nov. 18).

He compared this investment cycle with the one that happened in the early days of the internet. There was “clearly a lot of excess investment” at that time, but the internet was certainly “profound,” Pichai said.

“I expect AI to be the same,” Pichai said. “So I think it’s both rational and there are elements of irrationality through a moment like this.”

Pichai also told the BBC during the interview that if the AI bubble were to burst, every company would be affected, including Google. He added that Google would be better able than other companies to ride out such a situation because Google owns its own “full stack” of technologies, including chips, YouTube data, models and frontier science.

These remarks were posted on the same day it was reported that JPMorganChase Vice Chairman Daniel Pinto said that AI valuations need re-examination and that a downturn among AI companies would have a broader impact on the larger stock market.

“There is probably a correction there,” Pinto said at the Bloomberg Africa Business Summit in Johannesburg, per a Bloomberg report. “That correction will also create a correction in the rest of the segment, the S&P and in the industry.”

Amazon founder Jeff Bezos said Oct. 3 that the AI boom is an “industrial bubble” rather than a “financial bubble,” meaning that even if the sector’s share prices collapse, the technology benefits will remain.

“Investors have a hard time in the middle of this excitement distinguishing between the good ideas and the bad ideas,” Bezos said. “That’s also probably happening today. But it doesn’t mean that anything that’s happening isn’t real. AI is real, it’s going to change every industry.”

During the same conference at which Bezos made these remarks, Italian Tech Week, Goldman Sachs Chairman and CEO David Solomon said that a lot of the capital being invested in AI will not deliver returns, but that it’s not clear if the tech market is in a bubble.

Solomon added that AI will transform work.

“We are at the beginning of the movie not the end of the movie,” Solomon said. “I wouldn’t be surprised if in the next 12-24 months we see a drawdown in equity market but that shouldn’t be surprising given the run we’ve had.”

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