Ken Griffin on US-China Tensions and AI

Summary

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Podcast Summary: Exchanges – Ken Griffin on US-China Tensions and AI

Host: Raj Mahajan (Goldman Sachs)
Guest: Ken Griffin (Founder & CEO, Citadel)
Date: July 9, 2026
Episode Focus: An in-depth discussion with Ken Griffin covering leadership, AI’s disruption, the global economic landscape, the US-China relationship, portfolio management, and the hedge fund industry’s outlook.

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Overview

In this episode of "Exchanges," Ken Griffin joins Raj Mahajan to share his perspectives on leading Citadel through turbulent times, the rapid evolution of artificial intelligence, managing geopolitical risks (with a focus on US-China tensions), and the future of hedge funds amid changing technological and macroeconomic realities.

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Key Discussion Points and Insights

1. Leadership and Decision-Making at Citadel

[01:13]

• Bringing Teams Back to the Office: Griffin expresses pride in Citadel’s early return to in-person work, emphasizing mentorship and human capital development.
  • Quote: “Humans are social creatures. We learn through apprenticeship. Mentors are really critical to our personal development, growth, and bringing people back... Both drove results for our limited partners, but more importantly, helped maintain the strength of our human talent at Citadel.” — Ken Griffin [02:18]
  • Cites research showing remote work harmed employment opportunities for young Americans more than AI.
• Work During the COVID-19 Pandemic:
  • Griffin recounts intervening to secure FDA approval for experimental drug trials and supporting Operation Warp Speed by advocating risk-sharing through pre-approval vaccine manufacturing.
  • Quote: “We spent a few billion dollars as a country. We saved a few trillion dollars in GDP. We saved roughly half a million Americans.” — Ken Griffin [04:00]

2. Current Global Landscape: Markets vs. Geopolitics

[05:42]

• The S&P 500’s all-time highs occur despite multiple global conflicts (Middle East, Ukraine, potential issues in Cuba).
• Commodities:
  • US shielded from energy shocks; China has surprisingly curtailed oil demand, influencing global markets.
  • Quote: “The magnitude of that curtailment has been stunning.” — Ken Griffin [06:47]

3. The AI Revolution: Impact, Promise, and Societal Risks

[07:37]

• Myth vs. Reality:
  • While “AI” is a buzzword, most corporate gains come from classic machine learning and digitization, not advanced AI per se.
  • Growth in corporate productivity and earnings reflects this technological revolution.
• Disruption of High-Skill Work:
  • Anecdote: Citadel built an AI system to reproduce academic finance papers in a fraction of the traditional time.
    • Quote: “This is a master's or PhD level job. Six weeks’ work turned into... two to three hours on paper.” — Ken Griffin [10:48]
  • AI will reshape high-skill white-collar work, but at Citadel, tech augments teams rather than replacing them.
  • Notes competitive moats are eroding rapidly, fostering a potentially “golden age” for startups.
    • Quote: “Entrepreneurs will be able to launch new businesses at breathtaking speeds and will be able to take on incumbents in ways that you just couldn't do 5, 10, 15, 20 years ago.” — Ken Griffin [13:04]
  • The need to rapidly retrain workers displaced by translation and similar AI applications is highlighted.

4. Portfolio Management, Stock Picking, and Data

[13:56]

• Core skills for successful portfolio managers persist but must increasingly combine vision for transformative products with analytic acumen.
  • “Will the company beat this quarter’s earnings?” is harder to judge due to alternative data and AI transparency.
  • The true edge: seeing years ahead, not deciphering short-term results.

5. Compute, Technology Costs, and Market Making

[15:05]

• Citadel Securities relies heavily on advanced ML (e.g., TensorFlow, transformer models) in pricing and risk management.
  • AI tooling is now central across industries; variable compute resources are fully utilized.
  • Quote: “All the variable compute today is more or less utilized all the time. So the question is, who's willing to pay the most for it?” — Ken Griffin [17:11]
  • High compute costs favor high-margin businesses; smaller players face cost barriers.

6. US-China Tensions & Geopolitical Risk

[18:07]

• China’s rapid innovation and advancement in most key global technologies is a wake-up call for US competitiveness, especially in STEM education.
  • Quote: “The Chinese lead in about 67, 68 out of 74 technologies.” — Ken Griffin [18:25]
  • Urges US to focus on education, not tariffs, to compete.
• Taiwan Semiconductor Risk:
  • Losing access to TSMC chips would devastate US economic output—potential 8% GDP hit in six months, triggering a depression.
  • Mutual economic destruction in potential China-Taiwan conflict means military escalation is catastrophic for all sides.
• Investor Perspective:
  • Geographic exposure matters; not all countries would align against China.
  • Europe’s position less certain; Middle East would likely remain neutral (“Switzerland”).
  • Quote: “Where you sit in the world has very important implications about how you think about your China exposure vis a vis this one important issue.” — Ken Griffin [22:33]

7. AI, Data Centers, and the Future of Energy Production

[22:45]

• The US must lead in nuclear power (especially small modular reactors); renewables have hidden environmental downsides (coal-built solar cells, landfill-bound wind blades).
  • Quote: “We need energy. We better damn well build the data centers in America because they're going to get built somewhere in the world.” — Ken Griffin [24:36]
• Natural gas has been key to lowering US emissions; outsourcing data centers would be a strategic mistake.

8. Risk Management and Portfolio Hedging

[25:38]

• Focus is on understanding worst-case scenarios, not eliminating every tail risk.
  • Quote: “You'll never manage your portfolio for every possible tail event, but you should stay very focused on like what is the worst case scenario?” — Ken Griffin [25:38]
  • Tolerable, defined losses keep a firm in the game even during shocks.

9. Hedge Fund Industry Returns and Alignment

[26:12]

• Griffin estimates industry equilibrium is risk-free rate + 4% returns.
  • Oversized capital reduces alpha, necessitating capital returns to LPs to maintain high returns.
  • Alignment is critical: “Are they in the asset management business or are they in the performance business?” — Ken Griffin [27:21]

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Notable Quotes by Timestamps

• 01:13 Ken Griffin: “Humans are social creatures. We learn through apprenticeship. Mentors are really critical to our personal development, growth...”
• 04:00 Ken Griffin: “We spent a few billion dollars as a country. We saved a few trillion dollars in GDP. We saved roughly half a million Americans.”
• 06:47 Ken Griffin: “The magnitude of that curtailment has been stunning.” (On China’s oil demand)
• 10:48 Ken Griffin: “This is a master's or PhD level job. Six weeks’ work turned into... two to three hours on paper.”
• 13:04 Ken Griffin: “Entrepreneurs will be able to launch new businesses at breathtaking speeds and will be able to take on incumbents...”
• 17:11 Ken Griffin: “All the variable compute today is more or less utilized all the time. So the question is, who's willing to pay the most for it?”
• 18:25 Ken Griffin: “The Chinese lead in about 67, 68 out of 74 technologies.”
• 22:33 Ken Griffin: “Where you sit in the world has very important implications about how you think about your China exposure vis a vis this one important issue.”
• 24:36 Ken Griffin: “We need energy. We better damn well build the data centers in America because they're going to get built somewhere in the world.”
• 25:38 Ken Griffin: “You'll never manage your portfolio for every possible tail event, but you should stay very focused on like what is the worst case scenario?”
• 27:21 Ken Griffin: “Are they in the asset management business or are they in the performance business?”

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Conclusion

This episode offers a candid, data-driven look at the intersection of macroeconomics, geopolitics, and the transformative powers of AI. Griffin’s perspective is at once pragmatic and forward-looking, urging adaptation in education, energy, and investment strategies to meet a world defined by technological acceleration and geopolitical risk. For investors and business leaders, his insights provide both caution and optimism for navigating disruption in finance and beyond.

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Transcript

[Ken Griffin]

Foreign, You'll never manage your portfolio for every possible tail event, but you should stay very focused on, like, what is the worst case scenario? Can I tolerate that loss and monitor and maintain your exposures suck. That loss is a tolerable loss. It may be an extreme loss, but it's still tolerable.

[Raj Mahajan]

Welcome to another episode of Goldman Sachs Exchanges Great investors. I'm Raj Mahajan. I recently got the chance to catch up with Ken Griffin, the founder and CEO of Citadel at Goldman Sachs's Apex Symposium. Ken and I discussed the implications of AI, his approach to hedging portfolios, and the competitive landscape for the hedge fund industry. We hope you enjoy this conversation. Welcome back to Goldman Sachs, Ken.

[Ken Griffin]

It is great to be here today.

[Raj Mahajan]

This is our third public conversation in the past seven years. I know you well enough to know you think way beyond the numbers, and you're a student of leadership. So the first question I want to ask you is beyond the numbers for the past seven years, what are you most proud of as a leader in running Citadel?

[Ken Griffin]

So two things jump out with that question. The first is we were extremely early to bring everybody back to work. And in some sense, it was almost countercultural to demand your team to come back to an office five days a week. And yet I think that was an incredibly important part, not only of the success that you spoke of, but more importantly of continuing to develop our human capital. I think as a country, the amount of human talent that has been underdeveloped because of working remotely has had a significant damaging impact on our economy. And recently the Fed published a paper where they looked at factors that have caused reduced employment amongst those under the age of 30. And people would say, well, how much of this is the AI story? Well, it turns out that remote working is a more important factor to diminished employment opportunities for young Americans than AI. And so I'd say one of the things that I'm really proud of has been not only did we bring our team back to work, we publicly extolled what we thought were the strengths and virtues of doing so. And I think that history will be on our side. Humans are social creatures. We learn through apprenticeship. Mentors are really critical to our personal development, growth, and bringing people back into our four walls aggressively early. Both drove results for our limited partners, but more importantly, helped maintain the strength of our human talent at Citadel. That's one. The second is that during the start of the pandemic, actually literally as the first cases were happening in America, I was called by one of our former partners who is the CEO of a major New York hospital system, Dan Woodowski. And Dan called and said we cannot get FDA approvals for drug trials in intensive care with those who are on ventilators who are facing imminent demise. From COVID I'm like, okay, Dan, why are you calling me? And he says, because there's no one else who I think can actually make this happen.

[Raj Mahajan]

Warp speed.

[Ken Griffin]

Actually, Warp Speed was the second part of this chapter. We moved in about 72 hours to get the FDA to approve experimental drug trials for. For those with COVID here in the United States.

[Raj Mahajan]

Amazing.

[Ken Griffin]

And I'm really proud of my team that has worked hand in hand with government for decades to be able to rally resources around this existential moment in American history to help bring the full power of America's medical prowess to bear against a dreaded disease. Another dimension of this was the idea behind Operation Warp Speed, which I discussed at length with Jared Kushner. And that program saved ballpark, half a million American lives. And understanding incentives, understanding how to minimize distances in supply chains. So with Operation War Speed, the key insight was pay Big Pharma to produce vaccines before they have the FDA results. Okay? You get a positive result from the fda, the vaccine works. Your time to market is going to be measured in days, not first. Do your studies.

[Raj Mahajan]

Right?

[Ken Griffin]

Wait for the FDA results, then move to manufacturing and lose three to six months.

[Raj Mahajan]

That was an incentives problem.

[Ken Griffin]

That's an incentives problem, right? Because how do you get Big Pharma to spend potentially billions of dollars on producing vaccines, right. Who ultimately may not work and therefore will be literally flushed down a sewer system? So this was all about the US Government taking the risk to fund the manufacturing of vaccines, the efficacy of which was not known. We spent a few billion dollars as a country. We saved a few trillion dollars in gdp. We saved roughly half a million Americans.

[Raj Mahajan]

That's extraordinary.

[Ken Griffin]

So that's an extraordinary story that I think Citadel was a part of, and I'm most proud of.

[Raj Mahajan]

It's amazing. The track record also was accomplished at the same time of multiple wars. You had this global pandemic. And so let's move it to the current moment where we are. We have a conflict in the Middle East. We have potential energy and inflationary implications from that. At the same time, the S and P's at the highs, the IPO window has opened up, and there's a robust pipeline as a capital allocator. How do you think about this moment in time? What's the market getting right? What's it mispricing?

[Ken Griffin]

So big picture. Not only is there a war in the Middle east, there's still a raging war in Europe. And the peace that you and I grew up with for most of our adult lives is clearly not on the table right now. And for anybody following the situation in Cuba, there's obviously the potential threat of a would be a reasonably small skirmish in Cuba, but yet another war. And at some point do you encourage other countries around the world to increase their use of military power?

[Raj Mahajan]

We're going to get to that.

[Ken Griffin]

Okay, we'll get to that. So why are we seeing all time highs in the S and P while there's a war in the Middle East? Number one is the United States is somewhat shielded from the energy crisis that this war is creating. Right, the Straits, key transit point for energy. We all know these details. There's a couple things that have been, I would say upside surprises for the world economy. Number one is for a litany of reasons, China has been able to dramatically reduce their demand for oil. Much more elasticity of demand out of China than anybody had anticipated.

[Raj Mahajan]

You run one of the biggest commodity traders, did you guys see that coming?

[Ken Griffin]

Not the degree of the elasticity of demand destruction. So yes, of course China will find ways to curtail their need for crude. But the magnitude of that curtailment has been stunning. Number two, is this strategically a decision by Iran or this just happenstance? But there has been a constant, not constant, an episodic flow of oil from the region. Right. You'll get these LNG freighters that will get out with lng. You'll see the oil cargoes leave. We've managed to keep oil at roughly low hundred dollar price versus I would say most estimates were to put us at this point in this war. If the straits are closed, we'd be looking at almost $200 a barrel.

[Raj Mahajan]

Let's talk about in the S and P. The gains are being achieved by a narrow field of companies and AI is a big part, is a big bet effectively for equity markets. You've had quite a journey in your thinking around AI. The quote I think recently was on a Friday you were shocked and depressed coming home thinking about the implications of what AI will have on society. Maybe just share more about that journey and kind of where's your head today.

[Ken Griffin]

So we're going to cover a war, we're going to cover shocked and depressed from AI. Is there a happy ending to this conversation today?

[Raj Mahajan]

I mean I'm saving China for later.

[Ken Griffin]

Okay, great. So we've been a huge user machine learning since TensorFlow came to market about a decade ago. And machine learning has been revolutionary for the US economy in just a plethora away from reading radiological reports to self driving cars, to use ChatGPT to rewrite the email that you drafted for the last two minutes. And it does a much better job than we seem to be able to do. So the big picture is the United States has been undergoing a digital revolution yet again over the last decade, which has accelerated on the back of the AI revolution. And I'll share just a quick story with you. I was with a number of leaders at global multinationals about two years ago and we were having dinner and everybody was just effusive as to how AI was transforming their business. And I couldn't help myself. I'm like let's go around the table and share stories as to how AI is transforming your business. And I got four or five incredible stories of how companies were achieving meaningful productivity gains. Not one involved AI. Really not one. They involved machine learning, they involved optimization, they involved digitization, they involved technology. But within the C suite, I think the nuance between AI and technology writ large gets a little bit lost often. But your chief technology officers are certainly using bigger budgets, greater CC enthusiasm to really push through meaningful projects that have a real impact on the bottom line. And you talk about the S and P at all time highs. Corporate earnings in America are at all time highs.

[Raj Mahajan]

I mean the multiples actually come down because of that.

[Ken Griffin]

It's unbelievable the growth in earnings over the course of just the last 12 months. All right, so there is a technological revolution happening of which AI is a component of the story. But it's just a piece, I guess that's important. Point number one on the going home depressed on a Friday. I'll actually give you the use case. We, one of our team members built an agenic system to recreate academic papers in finance. So academia publishes a plethora of papers in finance. We read these papers thinking about the hypothesis, the quality of the work done. Do we think what they have observed will have persistence out of sample? Do stock buybacks cause stocks to outperform? Simple example, and you know you have a legion of young masters and PhDs doing this work. It takes roughly six to eight weeks to reproduce a paper. It's interesting work. We find a few ideas a year doing this. But for us a few ideas could be worth quite a bit of money. My colleague built an agencic AI system that would read a paper, reproduce it, verify the results that were published in the paper, produce the results out of Sample and do all this work in about on average two to three hours on paper. Right. So here, and here's the key point. This is not just a white collar job. This is a master's or PhD level job. Six weeks work turned into OpenAI just

[Raj Mahajan]

solved a math problem that no one had solved for 80 years.

[Ken Griffin]

Yes. So what you're seeing is you're seeing AI able to take on some really difficult tasks and crack problems that I think most of us would have viewed beyond the reach of AI just two or three years ago. Okay. So you think about what are the human capital implications of this for your business and for society as a whole. And there's a lot of implications. Now of note, there's no reduction in headcount sitting on the back of this breakthrough. Like, I have incredibly talented people. We have just a huge swath of problems that we're trying to attack and go after. I will take every single productivity gain I can get because with the talented people we have, we just have more to go after.

[Raj Mahajan]

That's really important for the room to absorb around this jobs point. This is going to make Citadel that much more productive. Scary thought, by the way, for the

[Ken Griffin]

hedge fund industry, but flip it around. There's a second part of this which is that competitive moats are being filled in at lightning speed. Okay. So you get to go home and have two thoughts in your mind at the same time. Wow. Think about the impact of this on very high level work in the job market. And in some areas, it's more difficult to retran to transition the employees. For example, if you do translation, you translate from English to German. That's a real problem. Like, you're going to need real skills retraining and we as a country need to think about how to use higher education to help these people retrain quickly. But number two, the competitive moats of our society, within our corporate society are all being filled in at breathtaking rates. Now what does this mean? This means that we're likely to see a golden age of entrepreneurial activity. Like entrepreneurs will be able to launch new businesses at breathtaking speeds and will be able to take on incumbents in ways that you just couldn't do 5, 10, 15, 20 years ago without getting to the details of a business. A friend of a friend has a startup would generally have 30 or 40 people. Couldn't afford that many people. How's he run the business with just a few agency AI systems? We're going to see a lot of these stories come to light over the next couple of years as entrepreneurs embrace this technology to really take on some very interesting opportunities to create value by meeting the needs of customers.

[Raj Mahajan]

It makes a ton of sense. So stay with Citadel for a second. I think in one of our previous sessions you called stock picking a timeless business. How do you see just the long short equity business where a number of people allocate capital to changing What's a PM who does that for Citinel in the future going to look like? Is it the same set of skills? Are they going to evolve? Are they going to adapt?

[Ken Griffin]

Look, I think it's a really similar set of skills. I think there'll be more focus and emphasis on those who have really good vision about what companies are actually creating transformative products that will change society. I think there will be much more, the market will reward that far more intensely in the future. Then will the company beat this quarter's earnings or not? I think the question of will a company beat this quarter's earnings has gotten far more difficult over the last 10 years because for example, the rise of alternative data. Sure, you know I have access to the credit cards of millions of Americans. What are they spending money on? What's that mean for Starbucks revenues this quarter? What's it mean for McDonald's this quarter? This is a decade old transformation, but the here and now is just becoming far more transparent, far more readily understood and triaged by the combination of really bright people and really good AI technology. Where this will leave us is those who are able to see what is unfolding over years to come will be in a very valued position on a relative basis.

[Raj Mahajan]

That's compelling at Citadel securities, this other business we haven't spent much time talking about, you have double digit market share in a number of different products in equities and futures, Treasuries. You keep reading about compute being this critical input into the production of market making liquidity. You're reading about billion dollar transactions. Just tell us about how do you think about sourcing COMPUTE within the market maker? How important is that for the future? And if you want to take it into distinctions between inference costs versus training costs and how do you sort of see that play out as running one of the most successful, frankly technology companies in the industry?

[Ken Griffin]

Look, I mentioned earlier that machine learning has been a critical part of the story of Citadel for a decade and that's equally true at Citadel Securities. So We've been using TensorFlow and the subsequent generations of ML models for 10 years. The rise of transformer models and other models of that ilk over the last several years has continued to progress our ability to both price and manage risk. And that's true not just for us, but for a number of other leading market making firms in the world. We compete for compute access with everybody. I mean today I don't know if your iPhone does this, but your text messages get summarized. I don't know if Goldman has your email summarized. We do summarize Goldman Sachs's research, I'm sorry to say. Couldn't help myself. It's kind of funny. It is amongst the best resources.

[Raj Mahajan]

There's a lot of alpha there.

[Ken Griffin]

So it's great.

[Raj Mahajan]

I mean let's make sure.

[Ken Griffin]

But you know, there's just a tremendous amount of AI tooling being used in society every day which has consumed and this is sort of breathtaking for all intents and purposes, all the variable compute today is more or less utilized all the time. So the question is who's willing to pay the most for it? It's just that simple. And the price of compute has certainly gone up per unit of compute beyond where people would have reasonably projected it two or three years ago. And so your large market making firms that make extensive use of these types of tools are spending today hundreds of millions of dollars on compute. And that is simply the going market price for this capability. Just like the price of jet fuel is higher today, price of eggs a few months ago is a lot higher than we'd like to see. There's inflation in compute cost. It's just a reality. And people who have lower margin businesses won't be able to bear that cost impact. And those who have higher margin businesses will. It's the nature of where we are today given the just enormous demand for compute across a litany of different use cases.

[Raj Mahajan]

So all compute manufacturing leads back to this chunk of China, Taiwan issue and tsmc. Can you tell us how do you think about where we are with the China relationship and chip security and investing in the region from your seat?

[Ken Griffin]

That is a lot of questions packed into one multiple choice.

[Raj Mahajan]

You can start anywhere.

[Ken Griffin]

Okay, let's start first of all with just the bottom line reality. China is one of the most innovative and fast growing economies in the world, period. In fact, it's a bit. As an American, I get frustrated by this. Out of roughly the 75 most important technologies in the world today leading whether it's solar, EV batteries, variety of different quantum areas, the Chinese lead in about 67, 68 out of 74 technologies.

[Raj Mahajan]

I saw a stat about academic published papers and they've pulled ahead of the

[Ken Griffin]

field as well, I'm not surprised. I mean fundamentally, 1.4 billion people, large population, extraordinarily strong emphasis on education in their society, like extraordinary. And then a substantially higher number of graduates with STEM degrees. They are creating the human talent that you need to win in a higher value added, higher intellectual property world for sure. And the United States needs to wake up to this reality. Like we need to move our feet and stay focused on the Chinese as a threat in the regime. In the area of the global economy where we have reigned for the last 50 years, the United States has owned the creativity and innovation area of new product development. And the Chinese historically have been relegated to producing low margin, low value added products designed in America. That is changing and that is a threat to our very way of life. So that is a cold economic reality. And the most important thing we can do as a country is not tariffs. It's we need to educate our youth to be able to stand their ground and out compete out, innovate and out problem solve their contemporaries across the ocean. So that's one. Number two is Taiwan's a particularly painful point of potential geopolitical tension.

[Raj Mahajan]

How do we end up here?

[Ken Griffin]

Right? And it's a situation where there is no winner. This is a really bad equilibrium because if China takes Taiwan, you know, the rough estimate is that the US loses access to Taiwanese semiconductor chips, our GDP falls by 8% in six months. Simply put, we go into a Great depression in the blink of an eye, unlike any we've seen before. It's staggering, staggering. And you go, well, how could that be? Boeing stops making planes in six months. Most new cars stop being manufactured in six months. Consumer electronics stop being made in six months. Everything freezes. TSMC chips aren't everything. Every high end product made, they're everywhere. And for China, obviously, putting the United States economy into such a tailspin would also have draconian knockout effects to their economy, given how big the United States is as an export market for the world. Right? So there are no winners in a world in which there is military escalation in Taiwan.

[Raj Mahajan]

How do you navigate this prisoner's dilemma as an investor?

[Ken Griffin]

So as an investor, you need to think about, and I think it varies depending upon where in the world you're situated.

[Raj Mahajan]

Right.

[Ken Griffin]

The Chinese, the nature of the economic consequences will be a function of where you sit. And we see that, for example, even in the war with the Middle east, right? The Iranians are very loathe to like they really want to get oil to China. That's their axis. That's their ally.

[Raj Mahajan]

Right.

[Ken Griffin]

So what you would see in a situation where if Taiwan were, a blockade was created around Taiwan, for example, you would see that the nature of sanctions and actions by countries around the world would not be unified in opposition to China anymore, in my opinion. And so is the country that's your home going to be part of the American sphere of influence where Europe is in? This is actually, I think, a bit of a question mark. We'd like to believe that they would be part of Team usa, but that's less clear today than it was two years ago. And then, for example, the Middle east is clearly going to look to play the role of Switzerland, right? China's a huge consumer of their primary export product, oil. They're going to look to be able to play the role of Switzerland. So I think where you sit in the world has very important implications about how you think about your China exposure vis a vis this one important issue.

[Raj Mahajan]

That's really insightful. We also took questions from the audience. One conference attendee asked about the outlook for energy production amid the rise of AI.

[Ken Griffin]

So the United States, from my perspective, has to absolutely embrace how do we become once again a world leader in nuclear and small modular reactors being a big part of that story. But we need to re embrace nuclear. No carbon footprint to speak of. And nuclear actually has one of the lowest mortality rates of any source of energy we've ever used. Hydro has killed magnitudes more people than nuclear has. So that's one. Number two is solar and wind create sort of the sense of superficial, like hey, we're environmentally friendly. But solar cells are often made in Western China. They burn coal to produce the solar cells. It's about a seven year recovery. You need to capture energy for seven years with solar cells to break even vis a vis the coal we used to produce them. And with wind, we still don't know what we're gonna do with the turbine blades. They last about 20 years. They're carbon fiber, they don't break down. Like they're no longer structurally strong enough to use in the turbine. But on the flip side, they don't readily break down. So they're gonna fill landfills around the world. They already are. To this day, we don't have a clean energy solution yet that's truly clean. And then until we have. And the holy grail, of course, is nuclear fusion. Until we get to nuclear fusion or broader use of nuclear. The United States does have one huge asset. We do have natural gas. And contrary to what you might think and read the press, the United States is one of the few countries to really brought down its carbon emissions by using natural gas. And we have decades and decades of supply of it at a very low and attractive price. So we need energy. We better damn well build the data centers in America because they're going to get built somewhere in the world. And can you imagine how absolutely inane it would be if we ended up having to be dependent on foreign countries for data centers? I mean like there's this whole not in my backyard ethos in America today. Okay, tell your data center provider you want to build a data center. Build the corresponding required power generation. Don't put the cost on the American consumer. Build the corresponding power generation. Tie the generator to the grid so that you've got reliability by tying yourself to the grid. But build the corresponding generation and build that damn data center in America. It would kill me if we end up having to pay a bunch of foreign countries tens or hundreds of billions of dollars of money a year.

[Raj Mahajan]

It's a hot political issue in the States now as you.

[Ken Griffin]

It's a hot political issue and no one's just taking a step back. They're going to get built.

[Raj Mahajan]

Yeah.

[Ken Griffin]

Do you want them built here in America? You want them built abroad? Like answer that question.

[Raj Mahajan]

Maybe space.

[Ken Griffin]

Maybe space.

[Raj Mahajan]

Another conference attendee asked how Ken thinks about hedging portfolios for complicated risks stress tests.

[Ken Griffin]

So if this happens, how much money are we going to lose and where? That's what you're trying to get your head around. And is that loss tolerable? You'll never manage your portfolio for every possible tail event, but you should stay very focused on like what is the worst case scenario? Can I tolerate that loss? And monitor and maintain your exposures such that that loss is a tolerable loss? It may be an extreme loss, but it's still tolerable, if that makes any sense.

[Raj Mahajan]

Definable.

[Ken Griffin]

Tolerable. Definable, tolerable. Still in business, still in a position to fight back from that point.

[Raj Mahajan]

Ken also got a question about the outlook for hedge fund returns.

[Ken Griffin]

We believe the industry's cost of capital is somewhere around the risk free rate plus 4%. So when the industry like just long run, we think that's the equilibrium point. If the industry underperforms, that capital will flow out. If the industry outperforms, that capital will flow in. And in recent years firms have in general outperformed their cost of capital and there's still a flow of capital into the industry. That bigger capital under management, all else equal, dilutes the alpha, right? So in some sense, one of the reasons that we've returned 25 or 30 billion dollars to our LPs is is to try to maintain a high return on equity. We have a certain amount of alpha we produce every year. My job is to try to increase the amount of alpha we can produce every year. How much capital do we need to support that investment portfolio to the extent that we're overcapitalized, put that money back into your hands to allocate into other areas where you can put the money

[Raj Mahajan]

so disciplined about that.

[Ken Griffin]

Try to be, try to be and part of this alignment. The biggest investor in our funds is my partners and myself. So we think that you should always look for in the hedge fund community. Like what is the alignment that you have with the gp? Are they in the asset management business or are they in the performance business?

[Raj Mahajan]

This episode was recorded at Goldman Sachs apex symposium on June 2, 2026. Thanks for listening. I'm Raj Mahajan.

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