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

October 14, 2026

AI Summary

5 min read

In the UK railway boom, the first line between London and Manchester was fantastically profitable. By the end of it, there were six competing lines, and none of them made any money. Ben Inker, co-head of asset allocation at GMO, which manages over $80 billion, argues that the AI build-out today is following the same pattern — and that a wave of equity supply from the largest IPOs in history will pop the bubble within the next 12 to 18 months.

Why AI Looks Like a Classic Bubble

Inker starts from a historical pattern: transformational technologies — canals, railroads, autos, electrification, the internet — almost always create bubbles. Everybody can see the world is about to change, and everyone wants a piece of it. The problem is that it is very hard to know where the money will actually be made. Early returns look great because demand ramps fast, which draws in huge amounts of capital. But that capital eventually creates oversupply, and once supply exceeds demand, the returns on the entire corpus of investment collapse.

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What you'll learn

1 (00:00) **The AI Bubble Thesis & Equity Supply Catalyst** - Ben Inker, co-head of asset allocation at GMO, introduces the core argument: equity supply from massive IPOs will pop the AI bubble within 12-18 months.
2 (07:51) **Record IPO Supply: SpaceX, Anthropic, OpenAI** - The scale of upcoming equity supply is unprecedented, with staggered lockup unlocks signaling even the issuers are aware of the problem.
3 (12:18) **Where the Pain Will Be Concentrated** - The AI bubble’s bursting will hit the epicenter hardest: the hyperscalers, semi-names, and pure-play AI companies.
4 (16:59) **The 1999-2000 Analogy: Overinvestment Before Proof** - The bubble can roll over before it becomes clear that the investment was malinvestment, just as it did in the internet era.
5 (20:32) **AI’s Creep into Every Sector** - AI has infiltrated industrials, emerging markets, and even toilet manufacturers, making it hard to find truly diversified exposure.
6 (24:06) **Market Structure: Why Supply Dominates** - The rise of passive investing and tracking-error-constrained active managers has made the market highly inelastic to supply, amplifying the impact of large equity issuances.
7 (29:40) **The Credit Market Danger** - AI is dominating credit markets too, and the risk-reward for lenders is terrible: they win a little if things go well, but lose a lot if they go badly.

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Show Notes

This episode is brought to you by Sarmaya Partners. Learn more about Sarmaya’s LENS ETF, their full data and comparison, including performance here: https://sarmayaetf.com/

Ben Inker, Co-Head of Asset Allocation at GMO, joins Other People’s Money to discuss why the IPOs and subsequent shareholder unlocks of SpaceX, Anthropic, and OpenAI will bring an unprecedented amount of equity issuance and pop the AI bobble. Inker explains how this mechanism was responsible for popping tech bubbles in 2000 and 2021 and the mathematical relationship between below average equity returns and equity supply. He also outlines how this equity supply in conjunction with a slowdown in the AI buildout from realizations of an AI overbuild could send the stock market down as much as 50% with even greater pain for the most AI linked companies.

Read GMO’s Q3 2026 Quarterly Letter: https://www.gmo.com/globalassets/articles/quarterly-letter/2026/gmo-quarterly-letter_3q-2026.pdf

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