Ken Griffin Warns AI Chip Glut Could Collapse Prices

Citadel CEO Ken Griffin warns that a surplus of artificial intelligence (AI) chips may lead to a significant drop in pricing, likening graphics processing units (GPUs) to airline seats that can still generate revenue when sold at low prices. He acknowledged the existence of bubbles in the AI sector but refrained from predicting a collapse, noting that companies that survive such bubbles often dominate markets for decades. Griffin made these comments during Citadel's annual Future of Global Markets Conference in New York. He explained that just as an unfilled airline seat can earn money even at a low fare, GPU prices could plummet if supply exceeds demand. He referenced the telecom boom around 2000, where excessive fiber optic installations led to falling communication prices. Griffin also commented on the recent AI-related selloff, suggesting it reflects investor research rather than hedge fund deleveraging. Wall Street firm BTIG anticipates a prolonged downturn in chip prices, potentially lasting until 2027, following an 11.4% drop in the Philadelphia Semiconductor Index (SOX), the largest decline since April 2025. He expressed skepticism about the longevity of GPU profitability, questioning whether older chips could maintain their value over the next several years. Additionally, corporate buyers are evaluating which tasks require premium AI models versus cheaper alternatives, impacting spending on AI technologies.

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