Google DeepMind CEO Demis Hassabis has issued a stark warning about the artificial intelligence (AI) investment landscape, suggesting many startups are riding an unsustainable bubble that could soon burst.
In an episode of “Google DeepMind: The Podcast” on Tuesday, Hassabis cautioned that numerous early-stage AI companies are securing valuations in the tens of billions of dollars despite having barely begun operations. DeepMind’s co-founder questioned whether such lofty valuations can be justified, particularly when many firms lack proven technology or sustainable business models.
“It’s sort of interesting to see how can that be sustainable,” Hassabis said. “My guess is probably not, at least not in general.”
The comments come as AI startups continue attracting massive capital inflows. Stanford University graduate Carina Hong, who dropped out to launch Axiom Math, raised $64 million earlier this year and recruited top researchers from Meta Platforms Inc. and Google Brain, according to a Business Insider profile of 16 young founders.
Hassabis drew a clear distinction between speculative startup valuations and established technology giants like Google that are investing billions in AI infrastructure. Big Tech companies have “a lot of real business” supporting their AI investments, he said, while many startups are raising money on hype rather than results.
The DeepMind CEO characterized AI as “overhyped in the short term” but “still underappreciated in the medium- to long-term.” He predicted that an “over-correction” is inevitable for transformative technologies like AI, especially when sentiment shifts rapidly from skepticism to obsession.
“When we started DeepMind, no one believed in it,” Hassabis recalled. “Fast forward 10, 15 years, and now, obviously, it seems to be the only thing people talk about in business.”
Such dramatic swings often drive valuations beyond rational levels, creating what he described as “an overreaction to the underreaction.”
Despite his concerns about market froth, Hassabis stressed he isn’t worried about whether AI is in a bubble. His focus remains on Google DeepMind’s mission of building advanced AI models that power products like Gemini and advancing frontier research.
Other prominent investors share his skepticism. Howard Marks, co-founder of Oaktree Capital Management, recently questioned whether investors should back unproven AI startups with no revenue over established tech companies where AI could provide incremental value.
“Do you want to have a novel entrepreneurial startup pure play which has no revenues and no profits today?” Marks asked on the “We Study Billionaires” podcast.
