Jeremy Grantham has spent six decades telling investors they’re wrong about valuations. His track record suggests they should probably listen.
The GMO co-founder appeared on CNBC on June 26 with a blunt assessment: the US stock market is now the most expensive it has ever been in American history. His evidence is the modified market-cap-to-GDP ratio, commonly known as the Buffett Indicator, which he pegs at roughly 235%. For context, that metric was considered alarmingly high when it crossed 150% during the dot-com era.
The AI paradox at the heart of Grantham’s thesis
Grantham presented what he describes as a dual framework. Either we’re in an extreme bubble that will eventually retrace to historical trend lines, or we’re genuinely in a new era driven by artificial intelligence.
Capital expenditures from major tech companies, including Amazon, Alphabet, Meta, and Microsoft, are approaching $300 billion. Grantham’s January 2026 report made a striking claim: strip out AI investments, and the US economy would likely be looking at flat or declining growth rates.
