Ray Dalio warns AI may dominate and self-destruct

Ray Dalio issued a caution that AI is "consuming everything" — yet he also noted the surge might "consume itself" if earnings fall short.

The Bridgewater founder commented in a new "All-In Podcast" episode released Tuesday that AI, while quickly transforming industries, might not be delivering "sufficient profits."

Dalio observed that investors may mistake investing in breakthrough technology for investing in the companies aspiring to monetize it.

"The technologies will continue, but the companies may not necessarily persist," he said, noting that it's "the norm" for many companies to fail to generate income from their hype.

He compared this to the dot-com era, where despite the internet revolutionizing the world, many early internet firms went bankrupt, he explained.

The billionaire investor further commented that with nations such as China offering advanced AI tools at very minimal costs, it might challenge American companies that are investing billions into the technology expecting substantial returns.

His remarks follow a February report by investment firm Citrini Research that reignited concerns about AI's economic implications, affecting investors and causing a stock market decline.

Citrini outlined a speculative scenario exploring how the AI surge might evolve over several years. 

The report — crafted as if reviewing from 2028 — envisions a future where AI integration speeds up but ultimately harms the wider economy.

In that imagined future, the extensive rollout of AI tools results in a significant drop in white-collar employment. 

As businesses automate tasks typically handled by professionals, job losses increase, diminishing consumer expenditure and slowing economic progress. The subsequent shock ultimately leads to a stock market downturn.