No Company Will Be Immune to AI Bubble Bursting, Google CEO Says

Every bubble has to pop, and the tech sector has been watching the field of AI very keenly, waiting to see if it’s going to burst. Because when that pops, it has the potential to cause disruption not just within the tech sector, but beyond too. 

Google’s CEO, Sundar Pichai, recently told the BBC that “no company is going to be immune” when the surface finally breaks, but is this a warning or just something we should expect?

Supply vs. Demand 

Since the release of ChatGPT in 2022 and the widespread boom of artificial intelligence, AI adoption numbers have been on the rise. According to Forbes, 66% of people use AI regularly, 78% of organizations use AI, and AI is an everyday reality for two-thirds of the planet’s population. As big as the internet and maybe even more powerful, AI continues to be in hot demand. 

However, can this demand be met? At the moment, the answer is likely yes, but that doesn’t mean it will stay that way. 

According to a report by the International Energy Agency, the energy behind AI – used to power data centers, cooling mechanisms, and more – will be a paramount focus. $580B will be spent on AI data centers this year alone, and $40B will be spent on finding new oil supplies. 

There are reports that this kind of spending could be enough to crash the US economy, and questions as to what kind of environmental impact could be felt as a result. 

“Training ever-larger models on massive data sets requires enormous computing power, which in turn drives up energy demand and environmental costs,” said AI expert Walid Saad. “It is not the most sustainable path for better AI.”

Learning from Google 

In a recent interview with the BBC, Pichai covered how the tech giant was approaching AI demand, including whether or not investment and enthusiasm were currently too overzealous. 

He said that while the growth of AI investment had been “extraordinary”, there was some “irrationality” in the AI race.

“I wouldn’t change anything about how we’ve always thought,” he said. “You see real demand, and we are constrained in our ability to meet that demand.” 

As BBC Economics Editor Faisal Islam puts it, Google’s unique approach to the market by owning its own “full stack” of technologies, including search data, YouTube data, chips, models, frontier science, and more, positions the company in a beneficial spot. It is going to be much more likely to ride out the wave of any incoming AI turbulence.

Who Will Survive the AI Bubble Bursting? 

Despite Google’s advantageous position, Pichai explained that if and when the AI bubble does burst, the outcome for Google – or any other tech company – was not something to consider lightly. 

“I think no company is going to be immune, including us,” he said. 

Interestingly, although Pichai acknowledged high energy demand as an important factor, he claimed that making decisions solely based on that was not the best way forward. 

“I think you don’t want to constrain an economy based on energy – I think that will have consequences,” he said. “I’m optimistic through this moment that we will have abundant sources of renewable energy in the future.”

Reports have rapidly come in questioning whether the AI bubble burst is around the corner due to plummeting stock markets and the health of the tech market, and although a concrete picture of the future is still unclear, this is likely something that will continue to be a talking point for the foreseeable future.

How Will the Bubble Burst? 

With bubbles in the past, like the infamous dot-com bubble at the start of the millennium or the housing market bubble before its imminent crash in 2008, the “popping” effect has happened in different ways. 

The dot-com bubble unraveled more than it burst, after a mixture of low confidence in profit-making, rising interest rates, and companies falling through the cracks led to investors realizing those companies weren’t real businesses. The 2008 housing market suffered its inevitable crash through a domino effect started by defaulting homeowners and ending with a weakened global economy. 

The supposed AI bubble displays similar traits to bubbles of the past. These include hype leading to unrealistic expectations, everyone rushing in to compete, and the top names in the business passing considerable amounts of money around – this time in what the McGill Journal of Economics is calling “AI’s infinite money loop”. 

However, there are also considerable differences. AI is already creating measurable value – this can be seen with companies like OpenAI and even Salesforce. Not only that, but AI has solid infrastructure, including cloud computing, data pipelines, and billions of users already online.

So, what would a pop look like? Top economists are still debating this. However, AI startups could be affected the hardest if the best AI players in the game (think OpenAI, Google, and Nvidia) make use of their funding and science to bring out more key AI features for free. We have already seen the potential of this with the sudden announcement of DeepSeek. 

Even though the tech sector may currently be trying to avoid one or two AI giants controlling the whole narrative, like Pichai discussed in the interview, that is not to say this isn’t the trajectory for the future.

Final Thoughts

A lot of people argue that there is an AI bubble, but how it bursts, when it bursts, and who it affects is much more up in the air. 

However, if one of the biggest companies in tech feels the shockwaves of its impact, who knows what kind of damage it could do to the sector as a whole.