Ray Dalio says AI is 'eating everything' - and it might 'eat itself'

"Investors often confuse betting on a breakthrough technology with betting on the companies trying to monetize it. The technologies will go on, but the companies won't necessarily go on. It's the norm for many firms to fail to make money from the hype. During the dot-com boom, the internet transformed the world, but many early internet companies collapsed."

"AI may not be producing adequate profits even as it rapidly reshapes industries across the economy. With countries like China releasing powerful AI tools at very low cost, it could put pressure on US companies that are spending billions on the technology in hopes of earning large returns."

"A February report from investment firm Citrini Research laid out a speculative scenario examining how the AI boom could unfold over the next few years. In that hypothetical timeline, the widespread rollout of AI tools leads to a sharp drop in white-collar employment as companies automate more tasks previously done by professionals."

Ray Dalio warns that while AI is rapidly transforming industries, the technology boom could collapse if companies fail to achieve adequate profits from their massive investments. He emphasizes that investors often conflate betting on breakthrough technologies with betting on companies attempting to monetize them, noting that many firms historically fail to generate returns from technological hype. Drawing parallels to the dot-com bubble, Dalio points out that while the internet transformed the world, many early internet companies collapsed. Additional pressure comes from countries like China releasing powerful AI tools at low costs, potentially undermining US companies' billion-dollar investments. A Citrini Research report has revived concerns about AI's economic impact, suggesting that rapid AI adoption could ultimately prove damaging to the broader economy through widespread job losses.

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