The AI Bubble Will Pop from Equity Supply Says This $80 Billion Asset Manager | Ben Inker | GMO

Artificial intelligence represents a classic technological bubble characterized by massive capital inflows and competitive, non-winner-take-all business models. The impending surge of equity supply from major IPOs, including SpaceX, Anthropic, and OpenAI, threatens to trigger a significant market correction, as current market structures lack the price elasticity to absorb such volume. This over-investment in data centers risks a future "compute glut," potentially leading to widespread corporate defaults and a 35-50% market decline if returns on investment fail to justify the massive capital expenditure. Ben Inker, co-head of asset allocation at GMO, warns that this cycle mirrors historical patterns of malinvestment, such as the internet and railway booms. Investors should prioritize diversified, reasonably priced assets—specifically resources and high-quality equities—to hedge against the systemic risks posed by an economy increasingly concentrated in AI-related bets.