Alphabet chief executive Sundar Pichai has warned that no tech company will be unscathed if a global artificial intelligence boom were to collapse, as soaring valuations and aggressive capital deployment revive concerns of a widening market bubble.
In an interview with the BBC, Pichai described the current phase of AI investment as an “extraordinary moment” but acknowledged “elements of irrationality” reminiscent of the dotcom-era “irrational exuberance”. While expressing confidence in Google’s ability to withstand a downturn, he admitted: “I think no company is going to be immune, including us.”
Investor enthusiasm has propelled Alphabet’s shares by 46 per cent this year on expectations that the company can hold its ground against OpenAI, the maker of ChatGPT. But unease over elevated valuations and the durability of AI-driven spending has begun to seep into broader markets.
On Monday, major US indices had posted notable declines, marking the first time since April 30 that both the S&P 500 and Nasdaq closed below their 50-day moving averages. US stock futures extended losses on Tuesday, with investors turning cautious ahead of Nvidia’s results due Wednesday, widely viewed as a barometer for the AI-led rally.
Large investors trimming AI exposures have further unsettled sentiments. Billionaire Peter Thiel’s hedge fund exited its entire Nvidia stake in the third quarter, while SoftBank CEO Masayoshi Son has also offloaded Nvidia holdings, redirecting proceeds into a substantial bet on OpenAI.
Stocks tumble
Asian shares tumbled on Tuesday, with benchmarks in Tokyo and Seoul sinking more than 3 per cent. Back home, snapping the six-day rally, the Sensex dropped 278 points to 84673.02, and the Nifty settled at 25910.05, lower by 103.4 points.
Bitcoin down
Cryptocurrency markets also reflected the broader risk aversion, with Bitcoin briefly falling below $90,000 on Tuesday for the first time in seven months before recovering above $91,000 later in the day.
Expert opinion remains divided. IMF chief economist Pierre-Olivier Gourinchas said on October 14 that while a dotcom-style correction was possible, it was unlikely to trigger a broader economic crisis. “This is not financed by debt, and that means if there is a market correction, some shareholders, some equity holders, may lose out,” he said.
Conversely, Goldman Sachs economist Joseph Briggs argued in an October 16 note that the multibillion-dollar capital flows into US AI infrastructure remain sustainable, though he cautioned that “the ultimate AI winners remain less clear” given rapid technological shifts and low switching costs.
