Citadel's Ken Griffin said investors are 'almost certainly' in an AI bubble

Investors are "almost certainly" in the midst of an AI bubble, said Ken Griffin, whose empire spans hedge fund Citadel and market-maker Citadel Securities, on Tuesday, according to Bloomberg. He said numerous businesses remain unsure about the size of their AI budgets and about the technology's eventual effect on the broader economy.

Griffin made the remarks in an interview at the Future of Global Markets Conference in New York. "Corporate America has been very uneven in its ability to extract value from its AI models," he said, according to Bloomberg. "I think all of Corporate America is looking at their bills from Anthropic and OpenAI and going, 'Okay, we need to think about how to make sure we're getting productivity out of this.'"

Anthropic is expected to make a public regulatory filing over the next few weeks as it prepares to list on the stock market, according to Bloomberg. The listing could rank among the largest initial public offerings ever. Anthropic may put $750 billion toward extra computing capacity over the next several years, according to a Wall Street Journal report cited by Bloomberg. Griffin said Anthropic’s fortunes hinge on convincing investors that its models are indispensable to businesses in every sector.

"Any radical transformation of our economy is generally intertwined with a bubble," Griffin said, according to Bloomberg. "These bubbles, if we want to use that word, often coincide with these giant technological transformations."

He pointed to the lead-up to the dot-com collapse and the "fanciful" business models that flourished then. "The companies that are on the other side of that bubble are the market leaders for decades to come," he said, according to Bloomberg. "I just wish I'd kept my Amazon $AMZN stock in that moment."

Griffin’s tone on AI has shifted this year, according to Bloomberg. He called AI “garbage” at Davos earlier this year and told a Stanford Business School audience in May that he was depressed by what the technology could achieve. On Tuesday, he said AI will spark a surge of startups across the U.S.

"You're seeing the threat to white collar jobs playing out; as a business owner, you're seeing your competitive moats be filled in by bulldozers," Griffin said. "At the same time, you're thinking that this will be a golden era for entrepreneurs."

Other investors have raised similar concerns. Earlier this month, Bridgewater Associates founder Ray Dalio said AI has the hallmarks of a "classic bubble" at a conference in Singapore. Dalio pointed to rising debt and climbing interest rates as the forces that could push the AI expansion toward a collapse.

Bloomberg said investors have grown more nervous in recent weeks about whether the AI boom can last. The concern is that the large sums being invested up front will take more time than anticipated to pay off in earnings and efficiency improvements.