Jeremy Grantham has a one-line test for a bubble: check the numbers, and “100 times sales pretty well does the job.” By that measure, SpaceX (NASDAQ:SPCX) is flashing red.

The GMO co-founder, who called the dot-com crash and the 2008 collapse, used this week’s Odd Lots podcast to take apart the largest IPO in history. He has warned that mega listings like SpaceX could break the S&P 500 from the inside, and he is not softening the message.

Why Grantham Calls The Prospectus A ‘Novel Slash Joke’

Grantham says this is the highest-priced market in history, give or take, and that SpaceX is its purest expression. Roughly 90% of the company’s value, as he reads the prospectus, rests on AI.

That is the part he finds absurd. SpaceX’s own AI, he said, seems to be “having its bottom kicked by 2 or 3 others,” yet investors “wouldn’t let facts get in the way of a really good story.”

Polymarket gives xAI just a 5% chance of being the best-model by the end of the year. Anthropic is in first with 61%.

In 50 years, Grantham said, historians will read the SpaceX prospectus as a “novel slash joke” and shelve it beside the South Sea Bubble, the 1720 mania sold as an undertaking too valuable to be revealed.

He said anyone who thinks it is not a bubble is “in for a bit of disappointment.”

The Cage Fight Inside The Index

Grantham’s deeper worry is the Magnificent Seven. For years, he said, they were comfortable near-monopolies, each ruling its own lane while regulators left them alone and the profits rolled in.

That era is over. All seven are now pouring hundreds of billions into the same AI race, a brutal fight he said only one can really win.

The trouble, in his telling, is that the market still prices them like the old, safe monopolies. A decade from now, Grantham said, investors will look back stunned that they ignored the gap between “seven easy monopolies and a dogfight of seven vicious, rich companies.” He even suggested, half joking, that the seven settle it on the White House lawn.

What Prediction Markets Say Next

On Polymarket, bettors give SpaceX a 13% chance of hitting $3 trillion this month, down from a coin flip earlier in the week.

Traders give a 21% chance to the AI bubble bursting this year, and a 13% chance of a recession in the same time period.

So for now, traders disagree with him. They see little chance of a bust, and they are still betting on SpaceX.

However, Grantham’s point is simple. Almost all of SpaceX’s value rests on AI, and those same traders rank its AI near the bottom of the field, behind Anthropic, OpenAI and Google.

For the bulls to be right, Grok has to climb from laggard to leader, and SpaceX has to grow into a price worth more than 100 times its sales.

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