Breaking

GMO's Grantham Flags Bubble Signs in Mag 7's Massive AI Spending

June 19, 2026 at 19:02 EDT

Infra & Chips
Funding & M&A
Foundation Models

GMO co-founder Jeremy Grantham, speaking on Bloomberg's Odd Lots podcast, framed the Magnificent 7's hundreds of billions of dollars in AI investment as a sign of a "classic investment bubble," drawing parallels to past railroad and dot-com manias.

June 18 · Jeremy Grantham, GMO co-founder

"A Bubble and a New Golden Era — Both at Once"

Grantham says the Magnificent 7's AI spending shows the classic hallmarks of a bubble, yet carries transformative potential on the scale of the railroads — making the internet bubble look, in his words, like "a piker."

~$300B

Combined 2025 AI spend by Amazon, Alphabet, Meta & Microsoft

~40

U.S. CAPE ratio — near internet-bubble peaks

7→1

Big Tech monopolies converging on one AI market

2026 Capex Outlooks — The Spending Race

Columns scaled to the high end of each company's guidance · all in $ billions

~$200B

Amazon

~$190B

Microsoft

~$190B

Alphabet

~$145B

The "Watershed Change" in Big Tech

Once near-monopolies in distinct niches, the Magnificent 7 are now colliding in one arena — driving the risk of overinvestment.

Separate moats → Same AI market → Capex arms race → Overinvestment risk

The Golden Era case

AI is a genuinely transformative idea — closer in scale to the railroads, whose bubble burst but left enduring infrastructure behind.

The bubble case

Buffett Indicator at all-time highs, a record share of the market above 10× sales, and skepticism over hallucinations and overvaluation.

Continue reading

The rest of this article is for AI News Blitz readers. Choose an option below to keep reading.