Speaking on the Hard Fork podcast with hosts Kevin Roose and Casey Newton, Demis Hassabis, CEO and co-founder of Google DeepMind and Isomorphic Labs, echoed concerns similar to those expressed by Sundar Pichai, CEO of Alphabet, about the AI industry’s seemingly unsustainable growth.

Figure 1. DeepMind Co-Founder Flags Potential Bubble in AI Industry.

“It’s too binary a question, I would say,” he responded. “In my personal view, some segments of the AI industry are probably in a bubble. For example, seed funding rounds reaching multi–ten-billion-dollar valuations for very little, despite talented teams, might be early signs of a bubble forming.” Figure 1 shows DeepMind Co-Founder Flags Potential Bubble in AI Industry.

As 2025 draws to a close, the AI bubble debate remains in the spotlight, following a year of unprecedented investment and soaring valuations for companies like Alphabet, Nvidia, and OpenAI. But according to Demis Hassabis, it’s not all cause for concern.

“I think there’s tremendous value in the work being done,” Hassabis said, pointing to new product areas such as Gemini app, NotebookLM, robotics, gaming, and drug discovery through Isomorphic and Waymo. “These are all emerging ‘greenfield’ areas. They’ll take time to grow into multi-hundred-billion-dollar businesses, but I see potential for half a dozen to a dozen of them to succeed, with Alphabet deeply involved. That’s very exciting to me.”

While it’s no secret that many AI companies are currently operating at a loss—OpenAI reportedly burned through $14 billion in this quarter alone—Hassabis remains optimistic about DeepMind’s trajectory.

“Immediate returns matter,” he explained. “At Google, we’re integrating these technologies into multi-billion-user products people use every day. We have countless ideas; it’s about execution. A lot of this will generate near-term revenue while also positioning us for the future.”

Hassabis added, “I feel confident about where we are as Alphabet, whether there’s a bubble or not. Our goal is to win in both scenarios. If there’s no bubble, we’ll seize the opportunities. If there is a bubble and the market corrects, we’ll be well-positioned to benefit from that too.”

The situation draws comparisons to the dot-com era, when countless startups were valued on little more than promise. That bubble burst in 2000, wiping out many companies and tech-sector jobs, and contributed to a brief U.S. recession in 2001.

There are growing concerns that the AI industry—fueled by unprecedented investment without guaranteed financial returns—might follow a trajectory similar to the dot-com era. This year has seen market leader’s soar: Alphabet reached a $3.5 trillion valuation, OpenAI reportedly hit $500 billion, and NVIDIA became the first company to surpass $5 trillion.

Alphabet CEO Sundar Pichai told the BBC that AI spending is in an “extraordinary moment” but acknowledged that “elements of irrationality” reminiscent of the dot-com era are now present in the market.

Hassabis’ cautious optimism seems reasonable: a bubble may exist, and if it bursts, it could prune the overcrowded AI sector and impact tech employment. Former IMF chief economist Gita Gopinath warns that a crash akin to the dot-com collapse could erase $20 trillion from U.S. households and $15 trillion from global investors. Yet, as with the internet, the AI industry is expected to emerge stronger and more sustainable. Major players like Alphabet, which continues to diversify across products, are likely to remain at the forefront of this enduring technological transformation.

In 2024, Hassabis made history alongside DeepMind director Dr. John Jumper by sharing the Nobel Prize in Chemistry for their groundbreaking work on AlphaFold, the AI system that predicts the 3D structures of proteins from their amino acid sequences.

Regarding Gemini 3, it’s certainly a major development, though many of its tools have yet to be widely released. Access to the launch model remains staggered across platforms in the U.S., so check out the video below for more details.

Source:NEW ATLAS

Cite this article:

Priyadharshini S (2025), Google DeepMind Co-Founder Warns: “The AI Industry is in a Bubble”, AnaTechMaz, pp. 322