A chief investment officer at Bridgewater says the AI boom is still in its early innings, but the market has now crossed into a risky territory.
In a new interview with Norges Bank Investment Management CEO Nicolai Tangen, Bridgewater’s Greg Jensen says the AI boom is unlike anything the world has seen, driven by companies and founders who believe they are racing toward world-changing breakthroughs rather than traditional profit cycles.
He says investors misread the early signals, failing to grasp how committed major players were to building out AI infrastructure regardless of economic conditions.
“I think there will be a bubble, but we’re nowhere near the bubble phase. We were in the phase where people have no idea what is hitting them, meaning how important this is and how much is going to get invested, because this is not a typical cycle. When you have people like Elon Musk and Sam Altman and Google and so on, whose businesses are threatened and believe that the power to control Earth and the universe is only a couple of years away, they are not motivated by the normal profit incentives of the typical cycle.
It’s not a CapEx cycle that’s the same as other CapEx cycles. This money is going to get spent.”
But the Bridgewater executive says that the early phase has now shifted into something more precarious. He warns that competition has now moved into the physical realm, where the biggest AI players are witnessing supply constraints in key resources that fuel the buildout.
“Now, we have just entered what I said is a more dangerous phase. I still do not think we are in a bubble, but we are in a more dangerous phase for the following reasons. That A, we are in the resource grab phase. Now, to do AI, there are not enough resources to go around. So everybody is trying to grab their resources.”
He points to land, power, and supply chains being locked up years in advance by giants who have already moved to secure their strategic position.
“Microsoft has got all the land where you can get power on the grid. They have done a great job of getting that land. Other people need to figure out places off the grid to get power. Nvidia’s supply has been bought up for years to come in the future and so on and so forth.”
Jensen adds that frontier research talent is even more constrained, forcing companies into a bidding war for the limited pool of people capable of pushing model capabilities forward.
“Because there are not that many cutting-edge scientists… but I think less than 1,000. And so that is really constrained. And if you are Meta, and you do not feel like you have the scientists, but you have the chips and the power, you get the scientists. You buy them. But then you are buying the ones who are buyable. That is always culturally an issue.”
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