Ex-Google CEO Eric Schmidt Rejects AI Bubble Fears: 'Not a Bubble' - Alphabet (NASDAQ:GOOGL)
Former Google CEO Eric Schmidt says artificial intelligence “is not a bubble.” He points to Anthropic’s rapid revenue growth as proof that customers are paying for technology they find useful.
“When I was CEO at Google, we set the revenue growth record. They smashed it more than twice the speed as we did,” Schmidt told Nicolai Tangen, head of Norway’s sovereign wealth fund, on the In Good Company podcast.
“That’s real growth there. It’s not fake. It’s real money with real customers who are paying for something useful in their eyes.”
Schmidt led Google, which is now part of Alphabet Inc. (NASDAQ:GOOGL), from 2001 to 2011. He did not explain how he worked out the growth comparison.
He also has a large financial interest in Anthropic’s success. Bloomberg reported that Schmidt owns about 1% of the company. That stake could be worth $15 billion to $20 billion based on company values discussed before its expected initial public offering (IPO).
Anthropic’s Growth Comes With Enormous Costs
Anthropic told potential investors that its revenue rose 45% in the third quarter to $16.8 billion. Revenue was $11.6 billion in the previous quarter and $4.7 billion in the first quarter, Reuters reported.
The company also told investors that it was making a profit after certain costs were adjusted for. However, its revenue growth slowed after more than doubling between the first and second quarters.
A draft document for its planned IPO, reviewed by Reuters, showed a net loss of $80.7 billion in the first half of 2026. This included a $72 billion accounting charge that did not involve cash and was linked to convertible financing.
Anthropic spent nearly $9 billion on computing and infrastructure during those six months. It has also committed to spending at least $518 billion over ten years.
China Could Win the AI Race on Users
Schmidt warned that Western AI companies could lose the worldwide competition for customers, even if they keep building more advanced models.
He estimates that Chinese AI models are about six months behind American models. But he believes free alternatives could become the main choice in poorer countries.
“If you define losing as users, the vast majority of the world will use the free Chinese models rather than the more expensive Western models,” he said.
This raises a question for Anthropic and its competitors: how much of the world's demand for AI can they turn into paying customers?
Polymarket Traders See Limited Risk of a 2026 Bust
On Polymarket, traders put the chance of an AI industry downturn by Dec. 31 at 9%. Nearly $2.5 million has been traded on this prediction.
For the prediction to count, three specific events must happen within the same 90-day period. Possible triggers include Nvidia Corp. (NASDAQ:NVDA) losing 50% of its highest-ever stock price, or Anthropic or OpenAI declaring bankruptcy.
These conditions measure whether the industry suffers a serious downturn. They do not measure whether AI stocks are priced too high.
Worries about AI spending have already hurt companies that provide the computing infrastructure needed for AI. CoreWeave Inc. (NASDAQ:CRWV) recently fell to its lowest stock price in 52 weeks as concerns about rising AI debt grew. Read more about the growing concerns over AI debt.
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