There are murmurs about whether current AI valuations are sustainable, but former Google CEO Eric Schmidt believes that AI is currently not in bubble territory.
In a discussion on 2nd December 2025, Schmidt didn’t just dismiss bubble concerns—he made a provocative argument (again) that AI might actually be “under hyped.” His reasoning cuts through the speculative noise to focus on something more fundamental: the automation of business operations at an unprecedented scale.
“No, it’s not a bubble. If anything, it’s under hyped because you’re fundamentally automating businesses,” Schmidt said. “And the reason people are spending this enormous amount of money is to automate the boring parts of what they view as the boring parts of their business. So whether it’s billing or accounting or product design or delivery or inventory or management or whatever, people are automating those.”
This framing recontextualizes the massive capital flows into AI—estimated at hundreds of billions of dollars across infrastructure, models, and applications—not as speculative excess but as essential business infrastructure investment. Schmidt’s characterization of these functions as “boring” belies their economic significance. These are the operational foundations of virtually every modern enterprise, representing trillions of dollars in annual labor costs and efficiency losses.
But Schmidt’s vision extends well beyond back-office automation. “And there’s an awful lot there. Think about medicine, think about climate change in engineering new science. It’s extraordinary,” he added, pointing to domains where AI could address some of humanity’s most pressing challenges.
There has been growing chatter about AI valuations being a bubble in recent times. OpenAI CEO Sam Altman had said that while AI is going to be enormously valuable, investors are currently “overexcited” about AI. Google Deepmind CEO Demis Hassabis has said that $50 billion seed rounds in AI aren’t sustainable. And former Meta AI Chief Yann LeCun has said that AI isn’t in a bubble in terms of apps, but it’s in a bubble in terms of believing current technologies will take us to AGI. Meanwhile, there are some who agree with Schmidt in saying that it’s not a bubble. Y Combinator’s Paul Graham has said that AI is not a bubble and it is not hype, and NVIDIA CEO Jensen Huang also believes it’s not a bubble. It remains to be seen how AI progress plays out in the next few years, but there’s an interesting divergence of onions among experts on whether current AI valuations can be sustainable.