Ken Griffin: Investors Are 'Almost Definitely' in an AI Bubble

Ken Griffin, founder of the hedge fund Citadel, stated on October 20 at the Future of Global Markets conference in New York that investors are "almost certainly" in an AI bubble – but he does not urge selling off AI stocks. "What remains after such bubbles often changes the world. And the companies that emerge on the other side of the bubble become market leaders for decades to come," he said. According to him, "any radical transformation of the economy is usually intertwined with a bubble": he recalled the internet boom and added that he regrets not holding onto Amazon stocks. However, he did not predict a crash.

Griffin's own firm is an example of how AI is already creating value: agents autonomously performing multi-step tasks have reduced some of Citadel's high-level research from weeks to a few hours.

Griffin compared graphics processors to airplane seats: both have extremely low marginal costs, so prices could plummet as soon as supply exceeds demand. He recalled the telecom boom around 2000 when more optical cables were laid than needed, and communication prices fell. He also questioned whether chips from five to six years ago, which currently yield "extraordinary" rental rates, will continue to do so for another five to six years.

According to him, buyers are becoming more discerning: they differentiate between tasks that justify premium models from OpenAI and Anthropic and those that can be handled by cheap open-source alternatives. Corporate America is unevenly benefiting from AI, he added: companies are examining bills from labs and asking where the productivity is.

Gartner forecasts global AI spending to reach nearly $1.5 trillion by 2025 – from chips and servers to AI-enabled phones. Meanwhile, Jensen Huang in Davos in January said that the industry has only gone through "a few hundred billion dollars" of the largest infrastructure buildout in history, with trillions still ahead. If clients refuse premium prices, chip and cloud companies will be the first to feel it.