As the S&P 500 hits record highs — up 16% YTD — Bridgewater’s co-CIOs are sending a clear warning:
investors may be underestimating the limits of the AI boom and overpricing optimism.
“Growth expectations today are about as optimistic as at any point in the last 100 years — except the dot-com bubble,”
said Bob Prince, Greg Jensen, and Karen Karniol-Tambour in a note to clients.
📉 The Core Message
AI has powered trillions in market value and re-ignited the U.S. equity rally.
But valuation discipline is fading while systemic risks — inflation, policy shifts, trade frictions, and the government shutdown — remain unresolved.
Despite those headwinds, market volatility metrics are near record lows — a setup that Bridgewater calls
“an uncomfortably high probability of unknowable and extreme outcomes.”
🧠 The Blind Spot
The excitement over AI infrastructure — chips, data centers, networking gear — could mirror past tech cycles.
As David Spreng (Runway Growth Capital) noted:
“AI infrastructure will become obsolete faster than expected. The risks are not symmetrical.”
In other words: markets are pricing perfection in a sector built on rapid obsolescence.
🔹 Closing Thought
AI may transform industries — but it doesn’t suspend financial gravity.
When optimism becomes the baseline, risk isn’t gone; it’s merely mispriced.