Citadel founder Ken Griffin said on Tuesday that investors are “almost certainly” in an artificial intelligence bubble. He did not tell people to sell their AI stocks.
Griffin spoke at Citadel’s Future of Global Markets Conference in New York on Oct. 20. He said big changes to the economy often come with a bubble.
A bubble happens when prices rise much faster than the businesses behind them can support. Because the AI buildout has driven stock markets over the past year, many index funds and retirement accounts are exposed to it.
Why Griffin Compares GPUs to Airline Seats
Griffin compared GPUs, the chips used to train and run AI models, to airline seats. Both cost very little to run for one more customer.
That means prices can fall fast once supply grows larger than demand. Griffin pointed to the telecom boom around 2000, when companies laid too much fiber-optic cable and communication prices dropped.
He also doubted that chips five or six years old will keep earning what he called extraordinary rental rates for another five or six years.
Buyers are also becoming more careful, according to Griffin. Companies are deciding which tasks need premium models from OpenAI and Anthropic and which can use cheaper open-source models.
He said corporate America has had mixed results getting value from AI. Some companies are looking at their bills from AI labs and asking where the productivity gains are.
Spending Forecasts and a Fund Sale
Gartner forecasts worldwide AI spending at nearly $1.5 trillion for 2025. That figure includes chips, servers and AI-enabled phones.
Nvidia CEO Jensen Huang said at Davos in January that the industry is only “a few hundred billion dollars” into the buildout. He said trillions of dollars more are still needed.
Goldman Sachs Research noted in December that analysts expect capital spending growth by the largest AI builders to slow from 75% in the third quarter of 2025 to 25% by the end of 2026.
On July 30, Situational Awareness, a hedge fund started by former OpenAI researcher Leopold Aschenbrenner, sold most of its public stock portfolio to Citadel. The sale was at about a 10% discount after the fund’s value reportedly fell about 67% in July.
The fund had borrowed up to four times its capital to buy AI stocks. As prices fell, its lenders asked for more collateral each day, which led to forced selling.
Griffin wrote in an August letter to clients that Citadel has since cut more than 80% of the risk in that portfolio.
Griffin said AI agents have cut some high-level research at Citadel from weeks to a couple of hours. AI agents are software programs that can carry out multistep tasks on their own.
He recalled the internet boom and said he wishes he had kept his Amazon stock.
“What’s left in the wake of these bubbles, if we want to use that word, is often game changing for the world,” Griffin said on Oct. 20. “And the companies that are on the other side of that bubble are the market leaders for decades to come.”
