Demis Hassabis has a blunt message for parts of the AI startup world: Some of this looks unsustainable.
The DeepMind cofounder and CEO said in an episode of “Google DeepMind: The Podcast” published Tuesday that there are likely “bubbles” forming in today’s AI funding frenzy, particularly among early-stage startups raising money at huge valuations.
Some startups “basically haven’t even got going yet,” he said, yet are raising at “tens of billions of dollars valuations just out of the gate.”
“It’s sort of interesting to see how can that be sustainable. You know, my guess is probably not, at least not in general,” he added.
Hassabis drew a distinction between those sky-high seed rounds and the large tech companies pouring billions into AI infrastructure. There’s “a lot of real business” underpinning Big Tech’s valuations, he said.
AI is “overhyped in the short term” but “still underappreciated in the medium to long-term,” he added.
Hassabis said an “over-correction” is imminent for any major technology shift like AI, especially when it goes from skepticism to obsession quickly.
“When we started DeepMind, no one believed in it,” he said. “Fast forward 10, 15 years, and now, obviously, it seems to be the only thing people talk about in business.”
That kind of swing often pushes valuations too far and too fast. “It’s almost an overreaction to the underreaction,” he said.
Hassabis also said he isn’t worried about whether AI is in a bubble — he’s focused on his job. Google DeepMind builds the AI models that power Google’s products, including Gemini, and leads the company’s frontier AI research.
Sky-high valuations for AI startups
Hassabis’ comments come as AI startups continue to rake in soaring valuations.
Business Insider reported last week that young founders — some of whom are fresh out of school — are raising millions for their AI startups. Many have dropped out to ride the AI wave, pulling in top investors and talent.
A Stanford graduate dropout raised $64 million for her AI math startup earlier this year. Carina Hong, the founder of Axiom Math, even recruited top AI talent from Meta and Google Brain.
The 16 young founders Business Insider spoke with this year have secured over $100 million in funding.
But not everyone is buying the hype. Howard Marks, the cofounder of Oaktree Capital Management, said on an episode of “We Study Billionaires” podcast published last week that investors are flocking to AI startups with little track record.
“Do you want to have a novel entrepreneurial startup pure play which has no revenues and no profits today, but could be a moonshot if it works?” the billionaire asked.
“Or do you want to invest in a great tech company, which is already existing and making a lot of money where AI could be incremental but not life-changing? It’s a choice.”