Legendary investor says the AI boom masks a deeper crisis: Falling sperm counts, shrinking populations, and vanishing resources
In a recent discussion, Jeremy Grantham, co-founder and chief investment strategist of GMO, expressed his concerns that the current AI boom is merely masking a more profound crisis. This crisis encompasses falling sperm counts, shrinking populations, and vanishing resources, which he believes could have far-reaching implications for society.
Who is Jeremy Grantham?
Grantham has earned a reputation as a permabear, often viewed as a doomsayer in the financial community. Over the last four decades, he has accurately predicted several market bubbles, including the Japanese stock and real estate bubbles in the early 1990s, the dotcom bubble in the early 2000s, and the U.S. housing bubble that led to the Great Financial Crisis in 2008. His insights have often been met with skepticism, but time has proven his analyses correct.
The Current Market Landscape
As of early 2026, Grantham argues that U.S. equities are trapped in what he describes as a “bubble within a bubble.” He points out that the original super-bubble was already inflating dangerously before the S&P 500 began to decline in 2022. However, the introduction of AI technologies, particularly ChatGPT, rejuvenated the market temporarily, creating a fresh wave of speculation.
The AI Boom and Its Consequences
Grantham believes that the AI boom has not resolved the underlying issues within the market; instead, it has deferred them and made them more severe. In his January 2026 paper, co-authored with financial historian Edward Chancellor, titled Valuing AI: Extreme Bubble — New Golden Era — Or Both?, he suggests that the chances of the AI bubble not bursting are “slim to none.” Grantham warns that if it does burst, it could lead to significant market corrections reminiscent of the worst bear markets in modern history.
Indicators of a Market Bubble
Grantham highlights several indicators that suggest the market is overvalued:
- The market’s price-to-book ratio and cyclically adjusted earnings multiples are at extremes not seen since 1929, 1972, 1999-2000, and 2021.
- Each of these periods was followed by severe market corrections.
- Current market exuberance, while notable, does not reach the dramatic levels of the dotcom boom.
Demographic Concerns
Beyond financial markets, Grantham is particularly worried about demographic trends. He cites alarming statistics regarding fertility rates and population decline:
- South Korea’s fertility rate has plummeted to 0.7, significantly below the 2.1 births per woman needed to maintain population levels.
- Japan’s population of 20-year-olds has halved from its peak, indicating a long-term demographic shift.
Grantham argues that these trends are not isolated incidents but part of a broader, mathematically certain demographic collapse that many societies are unprepared to address.
Resource Scarcity
Another critical aspect of Grantham’s argument is the impending resource scarcity. He asserts that the earth is running out of abundant resources, a situation he first highlighted in his 2011 paper, Time to Wake Up. Grantham contends that for over a century, technological advancements have outpaced resource scarcity, but this trend is shifting:
- We must brace ourselves for slower growth rates and reduced resource consumption.
- Most societies lack a comprehensive plan to cope with these changes.
Market Psychology and Behavior
Grantham also delves into the psychology of market participants, suggesting that investors often fail to look beyond the present moment. He believes that the market tends to extrapolate current conditions, leading to inflated price-to-earnings multiples and double-counted prosperity. This behavior results in a cyclical pattern of bubbles and bursts, driven more by emotion than rational analysis.
Conclusion
In summary, Jeremy Grantham’s insights highlight the precarious state of financial markets and societal structures. While the AI boom may seem like a beacon of hope, it masks deeper issues that require urgent attention. Falling sperm counts, shrinking populations, and vanishing resources present challenges that could redefine our way of life. As Grantham warns, the time to address these issues is now, before the consequences become too dire to manage.
Note: This article is based on the insights of Jeremy Grantham and reflects his views on the current state of the market and societal issues as of April 2026.
