Jeremy Grantham: Distinguishing Great Technology From Great Investments

June 4, 2026 - 11:45

Few investors have spent as much time studying market bubbles as Jeremy Grantham. Over the course of his career, the GMO co-founder correctly identified some of the most significant speculative episodes of the modern era, including the Japanese asset bubble, the dot-com boom, and the excesses that preceded the Global Financial Crisis. His track record gives his warnings a certain weight, and his latest caution is aimed at the current enthusiasm for artificial intelligence and related technologies.

Grantham argues that investors frequently confuse a revolutionary technology with a good investment. The logic is simple: just because a new invention changes the world does not mean it will make money for the people who buy its stock. He points to the early days of the internet as a clear example. The technology itself was transformative, but the companies that survived the crash were not the ones that had the highest valuations during the mania. Most of the early winners went bankrupt.

The key distinction, according to Grantham, is competition and pricing power. A truly great technology often attracts a flood of capital and new entrants. That competition drives down profit margins and makes it difficult for any single firm to capture the value it creates. The investors who pile in early, paying high prices for shares in unproven companies, are often left holding the bag when reality sets in. He suggests that the current hype around AI may be following a similar pattern.

Grantham is not saying that all new technology is a bad investment. He is saying that the price you pay matters enormously. A wonderful company bought at a foolish price can still be a terrible investment. His advice, drawn from decades of watching bubbles inflate and pop, is to remain skeptical when the narrative becomes too exciting and the valuations become too extreme. The best opportunities, he believes, often appear when everyone else is running the other way.