AI Bubble 17 Times Larger Than Dot-Com, 4 Times Bigger Than 2008 Real-Estate Crash: Experts Warn
Experts argue that while AI adoption in daily life is real and transformative, companies have exaggerated AI’s near-term capabilities, driving valuations far beyond fundamentals.
Is the AI bubble about to burst? As the global frenzy around artificial intelligence reaches a fever pitch, concerns of an impending bubble are growing louder. Experts that Zee Business spoke with claimed the AI bubble is 17 times bigger than the dot-com crash and four times larger than the 2008 real-estate collapse, raising alarms across the tech and investment ecosystem. Adding weight to these fears, recently Google CEO Sundar Pichai had also issued a rare warning, urging people not to place blind trust in AI or the market euphoria surrounding it.
Pichai described the current moment as “extraordinary,” but one marked by “elements of irrationality” reminiscent of the late-1990s tech boom. When asked how Alphabet would endure if the bubble burst during a foreign media interview, Pichai responded bluntly, “I think no company is going to be immune, including us.” He added that although Google might “weather the storm,” the impact of any sharp correction would ripple across the entire sector. His caution aligns with warnings from economists and veteran investors who see uncanny similarities between today’s AI hype cycle and past speculative manias.
The alarm comes at a time when AI-related companies are drawing unprecedented investor enthusiasm. Alphabet’s stock alone has surged nearly 46 per cent this year, propelled by the belief that Google can match or overtake competitors like OpenAI. Globally, companies are pumping billions into building AI infrastructure. Earlier in September, Alphabet had also announced a £5 billion investment in the UK, including a new data centre and expansion of DeepMind. Pichai also revealed plans to begin training models in Britain, supporting the UK’s ambition to become the world’s third major AI superpower. But this breakneck growth comes with a cost—including the “immense” energy required to train advanced models, which Pichai warned could delay Alphabet’s net-zero targets.
Pichai is not alone. A chorus of tech heavyweights is now voicing concern about an overheated market. Sam Altman, CEO of OpenAI, said investors are “overexcited” about AI and warned that “someone is going to lose a phenomenal amount of money.” Jeff Bezos compared today’s AI excitement to past industrial bubbles, noting that during such phases, “every experiment gets funded,” making it hard for investors to separate good ideas from bad. Bezos added that while industrial bubbles may not be as destructive as financial ones, market corrections are inevitable.
Experts believe that the adoption of artificial intelligence into the routine of daily life is an actual and revolutionary process, however, the companies have overstated the immediate capabilities of AI to such an extent that they have managed to push the prices of stocks to ridiculously high levels. Analysts have cautioned that in case of a bubble burst this situation could lead to a devastating earthquake in the world economy. Moreover, the Indian market will also be hit hard because of the large AI market and its reliance on global tech trends. Even as he warns of irrational exuberance, Pichai maintains that the underlying breakthroughs are genuine, “This is an extraordinary moment… despite elements of irrationality, the innovation is significant.”
