Ken Griffin Says AI Is 'Almost Certainly' in a Bubble—And Compares GPUs to Airline Seats
Citadel founder Ken Griffin said investors are 'almost certainly' in an AI bubble, though companies surviving bubbles tend to lead markets for decades.
Citadel founder Ken Griffin said Oct. 20 that investors are "almost certainly" in an AI bubble, but that companies surviving a bubble tend to lead markets for decades. The Wall Street giant made these remarks at Citadel's Future of Global Markets Conference in New York.
Griffin compared GPUs, the graphics chips crucial for AI development, to airline seats, warning that a chip glut could send prices into freefall, similar to how fiber-optic cable prices collapsed after the telecom overbuild around 2000.
What's left in the wake of these bubbles, if we want to use that word, is often game changing for the world. And the companies that are on the other side of that bubble are the market leaders for decades to come.
GPU Market Concerns
Griffin explained that both GPUs and airline seats have very low marginal costs to run, meaning the extra expense of serving one more customer is minimal. This characteristic makes prices vulnerable to collapse once supply outstrips demand.
He pointed to the telecom boom around 2000 as a precedent, when companies laid excessive fiber-optic cable beyond what demand required, leading to communication prices falling dramatically. Griffin also doubted that chips five or six years old, which currently earn extraordinary rental rates, will maintain those valuations for another half-decade.
Corporate AI Adoption
Griffin noted that corporate buyers are becoming increasingly selective, weighing premium models from companies like OpenAI and Anthropic against cheaper open-source alternatives that can be run on their own computers.
He added that corporate America has been uneven at extracting value from AI, with companies scrutinizing their bills from AI labs and questioning where the productivity gains are materializing. This skepticism could impact the revenue projections of AI infrastructure companies.
Market Projections
Gartner forecasts worldwide AI spending at nearly $1.5 trillion for 2025, encompassing everything from chips and servers to AI-enabled phones. Meanwhile, Nvidia CEO Jensen Huang has described the industry as being only "a few hundred billion dollars" into what he calls the largest infrastructure buildout in human history, with trillions still to come.
Wall Street analysts expect growth in capital spending by the largest AI infrastructure builders to slow from 75% in the third quarter of 2025 to 25% by the end of 2026, according to Goldman Sachs Research. This deceleration could signal a cooling of the current AI investment frenzy.
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