Investors who are convinced the AI boom has gone too far should brace for what’s about to hit the market, Greg Jensen, co-chief investment officer at Bridgewater Associates, said in a recent interview.
Jensen — who said he has spent more than a decade working with machine learning — said the market still hasn’t grasped how transformative the technology will be or how much capital is about to flood into it.
“The bubble is ahead of us, not behind us,” he said in an interview on the “In Good Company” podcast on Wednesday with Norges Bank Investment Management CEO Nicolai Tangen.
While some business leaders and investors, such as Bill Gates and Michael Burry, have said that the AI boom resembles the dot-com era, Jensen said the world hasn’t even reached the speculative phase.
Instead, he said, we’re still in the phase “where people have no idea what’s hitting them,” and that most investors don’t yet understand how radically AI will reshape markets, geopolitics, and economic growth.
AI leaders think the stakes are existential
Jensen said one reason the cycle is different from past tech manias is that AI leaders, including Elon Musk, OpenAI’s CEO Sam Altman, and Google, believe the stakes are existential.
They “believe that the power to control Earth and the universe is only a couple years away,” he said, adding that “they’re not motivated by this normal profit incentives of the typical cycle.”
That mindset means capital expenditure won’t slow just because valuations look stretched or funding gets expensive. “This money is going to get spent,” he said.
That has triggered what Jensen calls a “resource grab phase,” unlike anything the tech industry has experienced before.
The rush for power, data-center land, and advanced chips is already creating bottlenecks.
Talent, he added, is another bottleneck. Jensen estimated “less than a thousand” people globally qualify as truly cutting-edge AI scientists, and the fierce competition to hire them is slowing scientific progress.
Tangen said the market now looks like professional sports: “It’s like soccer players and the transfer season,” to which Jensen replied, “Exactly.”
The resource grab is already distorting markets
Despite AI’s growing impact on markets, Jensen said investors still focus too narrowly on the current winners.
Stripping out the big AI names, US equities have already started to underperform the rest of the world, he said — a sign that the sector is masking deeper economic shifts.
Meanwhile, AI-related capital spending is now large enough to move macro indicators: Jensen estimates that about one percentage point of US GDP growth this year stems from AI investment alone.
All of this, he said, is still just the beginning.
Jensen said the world is now entering a “more dangerous phase” of the AI cycle — defined by scarce resources, accelerating spending, and intensifying competition — and that investors still aren’t prepared for what comes next.
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