The $136 billion asset management firm founded by Ray Dalio says the AI boom is now at its most perilous state.
In its 2026 Global Outlook, Bridgewater Associates co-chief investment officer Greg Jensen says the AI investment cycle has entered a more precarious phase, even if the boom itself is not over.
“In terms of the phase, the AI boom is getting more dangerous… Last year, I said we’re not in a bubble. The bubble’s ahead of us. And what I was trying to get at then is that there were a lot of known things that were going to happen in 2025. The investment was going to happen. There was a massive amount. It was under-discounted in the markets. Today, I still think that’s largely true, and we can get into the subtlety of that, but it is definitely more dangerous.”
He says the backdrop has changed as enthusiasm has spread and spending has accelerated.
“Now everybody is on it. There’s a huge resource-grab phase. The capital expenditures are going to be at record capital expenditure levels across the US economy and across the globe. The need for capital is growing and massive.”
Jensen also notes that some of the biggest technology firms have moved from being net contributors to financial markets to major capital seekers.
“You went from Microsoft and Google being huge savers that benefited financial markets because they were doing big buybacks and building up big balance sheets of cash, and so on, to now, they’re spending that all. And they need to raise money in aggregate in the ecosystem.
In fact, by our estimates in 2027, AI capital needs are going to be larger than all the needs this year in the US corporate bond market. Big deal.”
With more investment already reflected in asset prices, Jensen says the path ahead may be less straightforward.
“And more is priced in. And so that leads us to more winners and losers than necessarily the straight line of winners that we’ve had. So those things make this situation a little bit more dangerous and so critical.”
Last week, reports emerged that Big Tech firms are allocating $655 billion in AI spend this year. The news triggered a correction in tech names, with software stocks being dumped the hardest as investors worry about the impact of AI on the subsector.
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