Ben Inker, GMO co-head of asset allocation, joins CNBC's 'Money Movers' to discuss AI bubble concerns, Japan's stock revolution and more.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Ben Inker, co-head of asset allocation at GMO, has raised concerns about the U.S. stock market's high valuations and its heavy reliance on the artificial intelligence sector. He warns that a wave of large IPOs, including companies like SpaceX, Anthropic, and OpenAI, could introduce hundreds of billions of dollars in new stock supply, potentially overwhelming the market and leading to negative reactions.

Inker suggests that the real risk comes when original shareholders are allowed to sell their holdings after IPOs, which has historically led to market downturns. He recommends looking to international markets, particularly Europe and Japan, where he sees more attractive valuations and opportunities for strong investor returns.

AI bubble concerns

Our next guest does believe that there is, in fact, some good signs for 26. Joining us here at Post 9 today is GMO's co-head of asset allocation, Ben Inker. Ben, welcome. It's good to have you. Thanks very much for having me. What do you think at least the first half looks like? Of 2026? You know, we're nervous because the U.S. market is very expensive and very reliant on the AI trade. I'm actually more worried about what happens after the giant IPOs that people are talking about come to market and as those shares free up, because that's actually going to be a huge amount of supply that comes to the market. And the market has trouble digesting. I mean, that will be hundreds and hundreds of billions of dollars of supply coming on. The market tends to react pretty badly to that. Right. So a lot of oxygen getting taken out of the room. But that's more of a second half story, wouldn't you think? Yeah, I think so. I mean, look, we are worried. We think AI is a bubble. Figuring out exactly when a bubble is going to burst is really hard, but we would rather be investing almost anywhere on Earth besides the U.S. these days. Really? International over U.S.? Yeah. Again for next year? Again for next year. We still think the dollar is substantially overvalued. There's a lot of cheap stocks remaining in Europe and particularly in Japan, where we're seeing a huge change in the market for corporate control. So we're really excited about the ability to really generate strong returns for investors. Yeah, that's a good point you brought up about the flood of supply, because we've never seen that much stock. If all of these rumored companies actually make it to the public markets, SpaceX, Anthropic, OpenAI potentially, you're talking about hundreds and hundreds of billions of dollars in just a few companies. I wonder if that's the case, if the market kind of corrects itself before they go public. Essentially, you get maybe one or two of these to come out, and then there are no more marginal buyers, and therefore you don't get those IPOs if the market really can't absorb it. You know, I'm not sure that it will happen that way. If you think about it, even SpaceX is talking about raising $30 billion. And $30 billion is a lot of money, but not in the scheme of the stock market. But if they go public at the $1.5 trillion that they're talking about, well, when a significant portion of the original holders of that $1.5 trillion, you know, $30 billion doesn't matter, $500 billion does, $700 billion does. And the reality is those flows matter, even if they're known. One of the things we have seen is the market is really much more inelastic than people assume. And when you get those flows, historically, the market has really taken a turndown. And part of what caused the turndown, we think, in 2022 was a huge burst of IPOs in 21. In 2000, part of what caused the market to roll over was a huge burst of IPOs that then, you know, got freed up. It's not when the IPO comes to market. It's when people are allowed to sell the rest of the shares that that becomes a problem for the market.

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