AI spending frenzy could reshape the economy, Bridgewater CIOs say

Spending on artificial intelligence by large corporations will continue ‍to grow exponentially and reshape the economy, Bridgewater Associates' co-chief investment ⁠officers said in a client note on Monday.

AI has emerged as the key driver of global corporate investment and a central force behind the ‌market rally, ‌altering capital spending plans across industries.

A surge in corporate spending across the AI ‌supply chain, from data center infrastructure to chips and power, has helped lift equity markets even as worries grow over a potential market bubble and the boom's sustainability.


"Straightforward game-theoretic calculations make it ​unacceptable for these companies to accept ​falling behind rivals by even a few months of progress, ‌so ‍one company's decision to spend more aggressively on ‍AI capex compels others to follow," the investment ‌firm's co-CIOs Bob Prince, Greg Jensen and Karen Karniol-Tambour wrote.

Global stocks swung sharply in the fall as growing concern over a potential AI stock bubble weighed on sentiment and heightened the risk of a selloff. Still, Wall Street's main indexes ended 2025 with double-digit gains, buoyed ‍by strong investor demand for AI-linked stocks.

Bridgewater CIOs said a surge in AI capital spending could increase ‍inflation as ⁠higher demand pushes ⁠up prices of items in its ecosystem, including chips and electricity.

They added that the dynamics could push up risks and create bubble-like conditions.

"Easy policy risks further accelerating speculative equity market activity and the frenzy of deal-making and AI investment that's already underway, creating a ripe environment for a bubble, and risks enabling a cyclical overheating," the note said. ​​​​​