Breaking

Grantham Calls Mag 7's AI Spending a Bubble on Odd Lots

June 18, 2026 at 07:00 EDT

Infra & Chips
Sales & Business

Jeremy Grantham, GMO co-founder and investment strategist, appeared on Bloomberg's Odd Lots podcast (released June 18, 2026), framing the Magnificent 7's massive AI investments as one of the largest capital-spending bubbles in history and outlining the signs he watches for a burst.

Magnificent 7 · AI Capital Frenzy

"Blood in the Streets": A Veteran Investor's AI Bubble Warning

Jeremy Grantham calls AI "one of the most impressive innovations in history" — yet warns the more obviously important a technology is, the more prone it is to a bubble. The Mag 7's "tooth and nail" AI spending may crack their monopoly margins.

~$300B

Combined AI-related spend by Amazon, Alphabet, Meta & Microsoft in 2025

-50%

Mag 7 decline in the 2022 bear market — before ChatGPT reversed it

2 of 7

Only two Mag 7 names beat the S&P 500 in 2025 — dubbed the "Lag 7"

Hyperscaler AI Investment as a Share of U.S. GDP

The spending is not just large — it is climbing fast against the whole economy.

1.3%

2025

1.6%

2026 (forecast)

How to Spot a Bursting Bubble

GMO defines a bubble as a deviation of two or more standard deviations from the long-term real price trend. Across 300+ such cases, large developed-market equities have always corrected.

Warning Sign 1

Collapse in the most speculative stocks

Warning Sign 2

High-quality names start outperforming

The Bear Case

One of the largest capital-investment bubbles in history. Monopolies turning into "tooth and nail" rivals — margin pressure and intensifying competition ahead.

The Counterview

A textbook "PermaBear" who underestimates AI's transformative power — early warnings that often miss. Even Grantham concedes: "AI is real and will change the world."

Continue reading

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