Bridgewater founder Ray Dalio believes that the long-term impact of AI on the economy is real despite flashing bubble signals.
In a CNBC interview in Abu Dhabi, the billionaire highlights that every tech cycle usually edges into bubble territory as investors pile in to ride the wave.
According to Dalio, investors shouldn’t dump their positions just because an asset class is in a classic bubble, as markets could still climb higher before the eventual collapse.
“Well, I think there’s the investor perspective, and then there’s the user perspective, right? I think it’s important to distinguish the fact that this technology will have, without a doubt, revolutionary beneficial impacts. That has nothing to do with a bubble. Okay, all the bubbles took place in times of great technological change. A lot of money is going in. It’s never done precisely. It’s either going to be too much or too little to make the profits. And then there’s just this up, this big up and down.
A bubble is a set of circumstances where, for various reasons, the buying and the selling are unsustainable… And then there’s the pricking of a bubble. OK, very important to make a difference to understand the difference. So as a bubble is arising, you don’t want to get out of it just because the bubble. You want to look for the prickling of the bubble, the pricking. And that usually has to do with the tightening of money.”
When asked whether he would invest in mega-cap tech firms if he were still running Bridgewater, Dalio says the answer is yes, but clarifies that he thinks users will be the ultimate winners.
“You have to bet on that. I would also bet more on the usage of it. In other words, there are the hyperscalers and so on. But the greatest impact is going to come from the users of it. So those who have the platforms for enabling or those who actually use it to change their cost, and their effectiveness will be the real beneficiaries.”
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