Citadel's Ken Griffin Makes Stark Call on AI Boom

Ken Griffin, the founder of Citadel, says investors are almost certainly in the middle of a bubble in artificial intelligence (AI). However, he also believes this technology could change the economy and create a new generation of leading companies.

Griffin said the biggest problem is that many American companies still cannot show that their huge spending on AI is creating enough economic value.

At the Future of Global Markets Conference in New York, Griffin said companies have had very different levels of success in getting value from their AI models.

He added that companies are increasingly looking at their bills from OpenAI and Anthropic and asking whether the improvements in productivity are worth the cost.

This question is becoming more important as spending on AI infrastructure continues to rise sharply.

Amazon AMZN has invested in Anthropic. According to The Wall Street Journal, Anthropic is expected to file paperwork to go public in the coming weeks and could spend as much as $750 billion on more computing power in the coming years.

Griffin said Anthropic's long-term success will depend on showing that its AI models become essential to businesses across many industries.

But his warning does not mean he thinks AI is just a passing trend.

Griffin said that major changes to the economy usually happen alongside a bubble.

He compared today's situation with the dot-com era. Back then, investors poured money into companies with weak business plans or ideas that had not been proven. Even so, the internet later changed the global economy.

What Investors Should Know

I think Griffin's point is more complex than simply saying AI companies are worth too much.

He is essentially saying that AI can change the world even if too much money is being invested in it.

This difference matters.

The biggest risk may not be that demand for AI disappears. Instead, too many companies may be valued as if they will all become successful over the long term.

History suggests that they will not all succeed.

Griffin also believes AI could put office jobs and the advantages held by established companies at risk. At the same time, he says it could create what he called a golden age for entrepreneurs.

For investors, the key things to watch are how AI companies make money, whether businesses become more productive, how much is spent on infrastructure, how quickly companies use up their cash, and whether they can turn AI use into lasting profits.

If Griffin is right, the AI boom could still create many hugely successful companies.

But some of the high company valuations we see today may not last.