AI Spending Bubble Debate Heats Up
Chamath, Citadel's Ken Griffin, and Charles Edwards all separately sounded alarms or milestones around AI — from a VC recycling critique to AI surpassing human intelligence in math — while the FT reported market jitters.
What we know
An account on X provided the sharpest framing: 1% of companies = 90% of AI spend, 80% of that is unprofitable VC-backed companies, meaning "$0.70-75 of every AI dollar is VC recycling" — responding to Ken Griffin's "almost certainly a bubble" call. Another account on X took the opposite philosophical view: AI has surpassed human intelligence in math for the first time last month — "a monumental point in history." another account on X RT'd 3blue1brown predicting an AI-generated channel will beat his in 3 years. The @FT noted small caps are not a great AI hedge and covered Nscale's attempts to reassure staff amid AI market jitters. Another account on X declared "the AI trade is over" citing Samsung/SK Hynix upgrading China chip plants.
How the story developed
Chamath, Citadel's Ken Griffin, and Charles Edwards all separately sounded alarms or milestones around AI — from a VC recycling critique to AI surpassing human intelligence in math — while the FT reported market jitters.
Citadel's Ken Griffin called AI 'almost certainly a bubble,' Chamath Palihapitiya backed the thesis with data showing 70-75¢ of every AI dollar is VC money, while Japan's BOJ deputy governor linked AI demand to rising Japanese investment — showing the debate cuts across markets.
Multiple data points converged suggesting the AI supercycle narrative is cracking — token spending growth collapsed, hyperscaler returns fell, Ken Griffin called it 'almost certainly' a bubble, and AI bond issuance hit $419B.
Citadel's Ken Griffin publicly warned that AI investment is almost certainly a bubble, citing companies' inability to convert massive spending into productivity. CDS on AI companies are hitting record highs simultaneously.
A fierce debate is playing out over whether the AI trade is overextended or just beginning. Citadel's Ken Griffin warned of 'almost certain bubbles in AI,' while SPCX and SMCI earnings are providing hard data points that repair the bull thesis.
By the Global Eye 24 desk, with AI assistance. Updated as the story develops. Spot an error? Write to corrections@globaleye24.com.