Jeremy Grantham, co-founder of GMO and known for calling past market bubbles, warned on CNBC that US stocks are at their most expensive levels in history due to an AI bubble, which could lead to a decline of up to 70%. He points to price-to-earnings ratios averaging over 60% higher since 2010 than the prior century, attributing this to years of cheap money and near-universal faith in AI. Grantham's bubble model suggests a reversion to trend, with the biggest winners potentially dropping closer to 70%. While timing is uncertain, his track record (calling the 2000 dot-com peak and 2007 housing bubble) adds weight. For crypto investors, the warning is significant because Bitcoin now correlates with tech stocks. US spot Bitcoin ETFs saw a record 30-day outflow of $6.35 billion through mid-June, with BTC near $59,663. Grantham dismisses crypto, calling it worthless. He advises shifting to non-US stocks, bonds, and precious metals. Bulls counter that AI leaders have real earnings, unlike the dot-com era, and Fed Chair Powell views AI spending as real economic activity.

Key facts

• Grantham warns AI bubble has pushed US stocks to record high valuations, posing risk of 70% decline.
• Bitcoin's correlation with tech stocks means a deep market selloff could hit crypto first and hardest.
• US spot Bitcoin ETFs saw record $6.35 billion outflow in 30 days through mid-June.
• Grantham advises shifting from US equities to non-US stocks, bonds, and precious metals.
• Bulls argue AI leaders have real earnings, unlike dot-com firms, and Fed sees AI spending as real activity.

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