Sundar Pichai’s “Irrationality” Warning Echoes 1999 Crash Fears

The ghost of the Dot-Com bubble has returned to haunt Wall Street, summoned by none other than the CEO of Alphabet, Sundar Pichai. In a move that has rattled investors, Pichai described the current fervor surrounding Artificial Intelligence as containing clear elements of “irrationality.” This choice of words is significant; it closely mirrors the “irrational exuberance” warning given by central bankers just before the 2000 tech crash. When the head of a company that is arguably the biggest beneficiary of the AI boom warns that the market is detached from reality, it forces a painful reassessment of asset values globally.
The market’s reaction has been a swift and brutal de-risking. The cryptocurrency sector, which often trades on pure sentiment, has collapsed, shedding $1 trillion in value in just six weeks. Bitcoin has retreated to $91,212, its lowest point since April, as the speculative froth is blown off the market. Traders are interpreting Pichai’s warning—that “no company is going to be immune”—as a signal that the high-growth phase is ending and a period of contraction is beginning.
The contagion is spreading to the broader economy. The FTSE 100 in London fell 1.3% on Tuesday, marking its fourth consecutive day of losses. Across the channel, the Stoxx Europe 600 dropped 1.8%, while Asian markets like the Nikkei 225 suffered even steeper declines. The synchronized nature of this sell-off suggests that the “irrationality” Pichai spoke of is not contained to US tech stocks but has infected global portfolios.
Adding to the gloom is the realization that the macroeconomic environment is not helping. Investors who hoped a Federal Reserve rate cut next month would reignite the party are seeing those hopes fade. The combination of “irrational” stock valuations and “rational” high interest rates creates a toxic mix for equities. Even gold, the traditional safe haven, has dipped to $4,033 as liquidity dries up.
The question now is whether this is a healthy correction or the start of a prolonged bear market. JP Morgan’s Daniel Pinto predicts a “correction” that will reset valuations. If he is right, the “irrational” boom of 2024 may well be remembered as the calm before the storm of 2025.