AI bubble ‘almost certain’: Citadel CEO Ken Griffin warns of GPU glut, falling prices

“Any radical transformation of our economy is generally intertwined with a bubble,” he said. Meta, Tesla earnings and AI concerns in focus Griffin compared the current AI boom with the dot-com bubble, when several internet companies had “pretty fanciful business models.” Despite the collapse of many companies during that period, some businesses went on to become major players. “I just wish I had kept my Amazon stock from that moment in time,” he said.

He added that bubbles often emerge alongside major technological changes, pointing to the development of railroads as another example. According to Griffin, some companies that survive such periods go on to lead their industries for decades. Ken Griffin's views on AI have changed Griffin's views on AI have changed considerably over the past year. Earlier this year, he called AI “garbage” at the World Economic Forum in Davos.

By May, he told an audience at Stanford Business School that he was depressed about what the technology could do. On Tuesday, Griffin explained that he had watched AI complete in a few hours work that previously took employees with PhDs and master's degrees four to six weeks. He said he went home that Friday feeling “depressed.” Griffin said three things were troubling him at the same time. He was worried about the threat AI posed to white-collar jobs, the possibility that his own competitive advantages could disappear and the opportunities the technology could create for entrepreneurs.

He described his competitive advantages as being “filled in by bulldozers.” However, when Burger asked whether his depression had “morphed into optimism,” Griffin said it had. He acknowledged that major technological changes hurt established businesses and workers during the transition. But he argued that people ultimately benefit from such changes. “Ultimately our lives are better,” he said, adding that no one would choose to live in 1926 rather than 2026.

Griffin said the US needed a “profound” national effort to help workers learn new skills. While there was plenty of “talk about it,” he said, there was “no action.” He warned that some workers whose skills fall within AI's “sweet spot” may already have lost their jobs. He gave the example of English-to-German translators whose work can now be done by AI. For American companies, he said, AI would mean moving faster on innovation, offering greater value to customers and cutting costs.

He believes consumers would benefit from these changes. He said startups often hire hardworking people without demanding perfect academic or professional credentials, giving those with “tarnished resumes” another chance. GPU oversupply could hurt AI investments Burger pointed out that semiconductor stocks had just recorded their longest and biggest losing streak since the global financial crisis. She also noted that some initial public offerings (IPOs) had been delayed.

Griffin said the market was “experiencing people doing research.” For the past couple of years, investors had bought almost everything connected to the expansion of data centres, including large cloud computing companies, chipmakers and suppliers in South Korea, Taiwan and Japan. Now, he said, investors were becoming “more discerning” and looking more closely at the businesses they were backing. Griffin highlighted two major concerns: a possible oversupply of graphics processing units (GPUs) and doubts about how long these expensive chips would remain profitable.

“Marginal pricing will actually go into freefall,” he said, describing what could happen if the market ends up with too much computing capacity. Griffin compared the situation with the telecom industry's fibre-optic network expansion around 2000. Companies invested heavily in infrastructure, but the resulting excess capacity put pressure on prices and business models. A similar situation in the GPU market could force investors to rethink the assumptions behind their current investments.

Investors question how long expensive AI chips will remain useful Griffin also raised concerns about the useful life of AI chips. Some buyers are still paying extraordinary prices for GPUs that are already five or six years old. However, he does not believe this situation will necessarily continue. He said investors were beginning to question whether these chips would generate enough revenue in the seventh, eighth and ninth years of their lives to justify their cost.

These questions could affect how investors value companies that build and supply AI computing infrastructure. 4 bn profit, 161% revenue growth & a Tesla merger in sight Griffin also said American companies had been “very uneven” in turning AI investments into real business benefits. The most advanced companies are now working out where they need to pay high prices for models from OpenAI and Anthropic and where cheaper, open-source models can deliver similar results.

In some cases, open-source models can perform the required tasks “at a fraction of the cost,” he said. Many companies are examining their AI spending more closely, and Griffin said “in some areas you’ve got a lot of waste.” Anthropic's planned spending raises questions Burger referred to a Wall Street Journal report that Anthropic's S-1 filing describes about $750 billion in planned spending. She asked Griffin whether such a large spending plan was at odds with companies trying to reduce their costs.

Griffin acknowledged that there was tension between the two trends. He said the outcome would depend on how essential Anthropic's models became to businesses. For example, if the company's AI models helped scientists discover cures for diseases, pharmaceutical companies could consider them so valuable that they would be willing to pay almost any price to use them. In that situation, Griffin suggested, the benefits could justify the enormous spending involved.

AI has not replaced human researchers at Citadel Despite the rapid progress in AI, Griffin said he had not changed his view that human researchers generate most of Citadel's returns. He described research as “the core of the business." AI can “shed some light” on a subject, but Griffin said a person still puts the overall narrative together. Trading, however, has become the most automated part of Citadel's business.

He explained that trading is how the firm turns the findings of its research into financial returns. Griffin expects Republicans to lose one or both chambers in midterms With the US midterm elections about two weeks away, Griffin said Republicans “will almost certainly lose one or both” chambers of Congress. Griffin said he had supported candidates from both political parties. He cited his support for Rahm Emanuel and an early fundraiser he held for former President Barack Obama.

He also estimated that a slight majority of Citadel's employees were Democrats. Griffin criticised several policies of the Donald Trump administration, including its approach to Iran, immigration and trade tariffs. On immigration, he criticised the treatment of undocumented immigrants who work and raise families in the US. He called their treatment “disgraceful” and said there should be a way for them to remain in the country, although that should not necessarily lead to citizenship.

At the same time, he praised the administration's efforts to close the US border, describing it as “a big win.” Griffin said Trump should not “double down” on his current approach if Republicans suffer heavy losses in the midterm elections. Instead, he said, the president should consider how to better reflect the views of the American people. US must fix its finances and grow the economy, Griffin says Griffin said the US government's biggest priority should be to “grow the damn economy.”

He pointed to a federal deficit of $40 trillion, high mortgage rates and elevated yields on 30-year US Treasury bonds as signs of the country's financial challenges. “Our fiscal house is clearly not in order,” he said. Griffin warned that Washington was not yet paying enough attention to the bond market. If the government continued on its current path, he said, the US could face higher inflation, a weaker dollar and a lower standard of living.

He called for greater investment in energy, including nuclear fission and fusion, as well as batteries, robotics and data centres built in the US. Griffin said the US should make it easier for foreign graduates to remain in the country, including by offering green cards to those with valuable skills. Citadel's focus shifts between London, Miami and New York Griffin described Citadel's “center of gravity” as “somewhere over the middle of the Atlantic Ocean,” reflecting the firm's presence across London, Miami and New York.

He credited Miami's growth to its business-friendly environment and Cuban immigrants, who have played an important role in the city's development. He also said Carnegie Mellon University's planned campus in Miami would “transform the city.” Griffin ended by defending the value of working together in person. He said physical proximity was important for developing young talent and helping employees learn from more experienced colleagues. “Nothing beats a whiteboard and a good debate,” he said.