Bridgewater Co-CIO: The AI Boom is Underestimated, the Bubble is Far from Coming

Zhu Yu, Jin10 Data

Investors should prepare for the impending market impact if they believe the artificial intelligence (AI) craze has become excessive, said Greg Jensen, co-chief investment officer of Bridgewater Associates, in a recent interview.

Greg Jensen claims that he has been working in machine learning for over ten years. He states that the market has yet to comprehend how transformative this technology is and has not realized the scale of capital that is about to flood in.

“The bubble is still ahead, not already behind us,” he said during an interview on Wednesday with Nicolai Tangen, CEO of Norges Bank Investment Management, on the “In Good Company” podcast.

Although some business leaders and investors, such as Bill Gates and Michael Burry, believe that the artificial intelligence boom is similar to the internet bubble era, Jensen stated that the world has not even entered the speculative phase yet.

On the contrary, he said, we are still in the stage where “people have no idea what is hitting them,” and most investors have yet to understand how artificial intelligence will fundamentally reshape markets, geopolitics, and economic growth.

AI leaders believe it is related to “survival”

Jansen stated that the difference between this cycle and previous technological frenzies is that leaders in artificial intelligence, including Musk, OpenAI CEO Altman, and Google, believe this is a matter of “survival.”

He said they “believe that the power to control the Earth and the universe is just a few years away,” and added that “they are not driven by the typical profit incentives found in normal cycles.”

This mindset means that capital expenditures will not necessarily slow down just because valuations appear too high or financing costs become more expensive. He said, “This money has to be spent.”

This has triggered what Jensen refers to as the “resource competition phase,” something the tech industry has never experienced before.

The scramble for electricity, data center land, and advanced chips has already created bottlenecks.

He added that talent is another bottleneck. Jensen estimates that globally, there are “fewer than a thousand” truly top AI scientists, and the fierce competition for them is slowing scientific progress.

Tanggen said that the current market looks like professional sports: “It's like football players and the transfer period,” Jensen replied: “Exactly.”

Resource competition has distorted the market

Jansen said that despite the increasing impact of artificial intelligence on the market, investors are still too narrowly focused on the current winners.

He stated that after excluding the stocks of those large artificial intelligence companies, the performance of the U.S. stock market has begun to lag behind other regions of the world — indicating that the industry is masking deeper economic shifts.

At the same time, capital expenditures related to artificial intelligence have now reached a scale large enough to impact macroeconomic indicators: Jensen estimates that this year, approximately 1 percentage point of the growth in U.S. Gross Domestic Product (GDP) is solely due to investments in artificial intelligence.

He said that all of this is just the beginning.

Jansen stated that the world is now entering a “more dangerous phase” of the artificial intelligence cycle—characterized by resource scarcity, accelerated spending, and intensified competition—while investors remain unprepared for what is to come.