Bridgewater Co-Chief Investment Officer: AI Craze Underestimated, Bubble Far From Here

Zhu Yu, Jinshi Data

Investors who are convinced that the artificial intelligence (AI) hype has gone too far should prepare for the market shocks that are about to occur,

said Greg Jensen, co-chief investment officer at Bridgewater Associates, in a recent interview.

Jensen, who claims to have worked in machine learning for over a decade, said that the market still hasn't grasped just how transformative the technology is, nor does it realize the sheer volume of capital that is about to flood into it.

“The bubble is still in the works, not over,” he said in an interview on Wednesday with Nicolai Tangen, CEO of Norges Bank Investment Management, on his “In Good Company” podcast.

While some business leaders and investors, such as Bill Gates and Michael Burry, believe the AI ​​boom is similar to the dot-com bubble, Jensen says the world hasn't even entered the speculative phase yet. Instead, he says, we're still in a phase where "people have no idea what's impacting them," and most investors haven't grasped how AI will fundamentally reshape markets, geopolitics, and economic growth. AI leaders see it as a matter of "survival." Jensen states that what distinguishes this cycle from previous tech frenzyes is that AI leaders, including Musk, OpenAI CEO Altman, and Google, see it as a matter of "survival." He said they "believe that control of the earth and the universe is only a few years away," adding, "They are not driven by the kind of normal profit incentives found in typical cycles." This mindset means that capital expenditures won't slow down simply because valuations look too high or financing costs are rising. "This money is bound to be spent," he said. This triggers what Jensen calls a "resource-grabbing 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-tier AI scientists, and the fierce competition for them is slowing scientific progress. Tangan stated that the current market resembles professional sports: "It's like football players and the transfer window," Jensen replied, "Exactly." Resource competition has distorted the market. Jensen said that despite the increasing impact of artificial intelligence on the market, investors are still too narrowly focused on current winners. He stated that excluding the stocks of large AI companies, the US stock market has begun to lag behind the rest of the world—indicating that the industry is masking a deeper economic shift. Meanwhile, capital expenditures related to AI are now large enough to influence macroeconomic indicators: Jensen estimates that about one percentage point of US GDP growth this year will come solely from AI investment. He said that all of this is just the beginning. Jason 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—and investors are still unprepared for what's to come.