<div id="readability-page-1"><span></span><div><p>This week, volatility took hold of the AI trade as bubble fears continued to rise and <span id="SpecialReportArticle-QuoteInBody-1">Nvidia<span><span id="-WatchlistDropdown"></span></span></span>'s blowout earnings failed to steady the market.</p><p>&#34;Unless you're the most optimistic person on the planet … you know you're in a bubble, right?&#34; Dan Niles, founder of Niles Investment Management, told CNBC's Deirdre Bosa. &#34;There is no question you're in a bubble.&#34; </p></div><h2>Industry insiders raise AI bubble alarms</h2><div><p>Industry insiders are also beginning to raise the alarm, with <span id="SpecialReportArticle-QuoteInBody-2">Alphabet<span><span id="-WatchlistDropdown"></span></span></span> CEO Sundar Pichai warning of an overrun.</p><p>&#34;Given the potential of this technology, the excitement is very rational. It's also true when we go through these investment cycles, there are moments we overshoot collectively as an industry,&#34; Pichai told the BBC. &#34;I think it's both rational and there are elements of irrationality through moments like this.&#34;</p><p>At a recent internal all-hands meeting, Pichai reiterated a point he's made previously about the risks of Google not investing aggressively enough, CNBC reported Friday. </p><p>&#34;I think it's always difficult during these moments because the risk of underinvesting is pretty high,&#34; said Pichai, pointing to Google's cloud business, which just recorded 34% annual revenue growth to more than $15 billion in the quarter. Its backlog reached $155 billion. </p><p>&#34;I actually think for how extraordinary the cloud numbers were, those numbers would have been much better if we had more compute,&#34; he said.</p></div><h2>Google's AI momentum</h2><div><p>Meanwhile, Google on Thursday surpassed <span id="SpecialReportArticle-QuoteInBody-5">Microsoft<span><span id="-WatchlistDropdown"></span></span></span> in market cap for the first time, as the search giant was lifted by renewed AI momentum. The search company launched Gemini 3 on Tuesday, which shot to the top of AI model rankings. Google also rolled out an updated version of its viral AI image generator Nano Banana on Thursday.</p><p>&#34;I've never had more fun than right now,&#34;  Josh Woodward, vice president of Google Labs and Gemini, told CNBC in an interview. &#34;I think it's partly the pace, it's partly the abilities these models give to people who can imagine new use cases and products. It's unparalleled.&#34;</p></div><h2>Nvidia's China threat</h2><div><p>Nvidia's earnings on Wednesday failed to restore confidence in the tech trade, despite the company posting a beat-and-raise quarter. Instead, the chipmaker added to fears of escalating geopolitical risk with China. Nvidia's finance chief Colette Kress told analysts that &#34;sizable purchase orders never materialized in the quarter due to geopolitical issues and the increasingly competitive market in China.&#34; </p><p>Aaron Ginn, co-founder and CEO of the graphics processing unit management company Hydra Host, said the West's attitude toward Chinese AI is the biggest threat to Nvidia's dominance.  </p><p>&#34;We just have to accept that we fell behind the eight ball in the fact that China is a manufacturing powerhouse,&#34; he said. &#34;We have the ability to beat back that trade balance to where we are now leaders.&#34;</p><p>Watch this video to learn more.</p></div></div>

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<p>This week, AI trade faced volatility amid bubble fears, with Nvidia's strong earnings failing to stabilize the market. Industry insiders, including Alphabet CEO Sundar Pichai, warned of potential overinvestment. Google surpassed Microsoft in market cap, driven by AI advancements like Gemini 3. Nvidia's earnings highlighted geopolitical risks with China, impacting market confidence.</p>

- This week, volatility in the AI sector increased amid bubble concerns, with Nvidia's strong earnings failing to stabilize the market.  
- Alphabet CEO Sundar Pichai acknowledged both rational excitement and irrational overshooting in AI investments, emphasizing the risks of underinvestment despite Google's significant cloud growth.  
- Nvidia's earnings report heightened fears of geopolitical risks with China, as the company faced challenges in securing orders due to competitive pressures and market dynamics.

This week in AI: Brushing off new bubble warnings, Google’s AI comeback and Nvidia’s China threat