Google DeepMind chief Sir Demis Hassabis has warned that exuberance in parts of the AI industry looks increasingly “bubble-like”, while arguing that its scale and technology leave the Big Tech group well placed for any potential reckoning.

The British Nobel laureate told the FT that the level of investment in some parts of the tech industry had become detached from commercial realities. “Multibillion-dollar seed rounds in new start-ups that don’t have a product or technology or anything yet do seem a little bit unsustainable,” he said at the World Economic Forum in Davos this week, adding this may lead to “corrections in some parts of the market”. The comment comes as other tech leaders in Davos, such as Nvidia’s Jensen Huang and Microsoft’s Satya Nadella, batted off concerns of over-investment in the sector.

Venture capitalists have rushed to buy into groups such as former OpenAI executive Mira Murati’s Thinking Machine Lab, which was valued at $10bn just six months after it was founded and despite giving few details on what it is building. The start-up recently lost a number of key staff, raising doubts about its long-term prospects.

There have also been investor concerns over the multibillion-dollar race to build AI infrastructure, including a series of debt-fuelled deals that rely on usage of the technology to keep growing. Hassabis said demand for AI across Google’s products, such as its latest Gemini 3 model, was stronger than ever, insisting it would prove to be “the most transformative technology probably ever invented”.

“If the bubble bursts we will be fine,” he said. “We’ve got an amazing business that we can add AI features to and get more productivity out of.” Last year, Google rebounded from a difficult period since the release of OpenAI’s ChatGPT in 2022. Its AI models now surpass the performance of its smaller rival and the search giant is closing the gap in chatbot users.