Citadel founder Ken Griffin stated that the AI sector is likely in a bubble, though he did not advise investors to sell their holdings. Speaking at the Future of Global Markets Conference on October 20, he noted that radical economic transformations often involve bubbles, citing the internet boom as a historical parallel.
Griffin compared AI graphics processing units to airline seats, noting that low marginal costs could lead to price collapses if supply exceeds demand. He also observed that companies are becoming more selective, choosing between premium models from OpenAI and Anthropic and cheaper open-source alternatives.
Market data indicates that capital spending growth by major AI infrastructure builders is expected to slow from 75% in the third quarter of 2025 to 25% by the end of 2026. Meanwhile, Gartner projects global AI spending to reach nearly $1.5 trillion in 2025.
Citadel recently acquired a significant portion of the public stock portfolio from the hedge fund Situational Awareness at a 10% discount following a period of forced selling. Griffin confirmed that Citadel has since reduced the risk associated with that portfolio by more than 80%.
