Bridgewater Associates' co-chief investment officers told clients on Monday that spending on artificial intelligence by large corporations is likely to keep growing at an exponential pace and to reconfigure the economic landscape.
In the note, the co-CIOs described AI as the principal engine behind global corporate investment and a major factor behind the recent market rally. They said capital expenditure plans are being adjusted across industries to accommodate AI-related priorities.
The firm pointed to a broad-based surge in corporate spending across the AI supply chain - including data center infrastructure, semiconductor chips and electricity - as a contributing force that has supported equity markets even as concerns mount about a potential market bubble and questions about the sustainability of the boom.
On the competitive dynamics, the co-CIOs wrote: "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." That logic, they said, creates pressure for firms to accelerate AI capital investments so as not to lag competitors.
Bridgewater's analysts noted that global stocks experienced sharp swings in the fall as rising unease over a possible AI-driven stock bubble hurt sentiment and raised the prospect of a market selloff. Despite that volatility, the major Wall Street indexes closed 2025 with double-digit gains, a performance the firm attributed in part to strong investor demand for AI-linked stocks.
The firm also warned of potential macroeconomic consequences from a rapid increase in AI capital spending. Higher demand within the AI ecosystem could push up prices for key inputs, the co-CIOs said, and "could increase inflation as higher demand pushes up prices of items in its ecosystem, including chips and electricity."
Alongside inflationary concerns, Bridgewater flagged that the same dynamics could elevate financial stability risks. The note cautioned that easy policy could further fuel speculative equity market behavior and intensify deal-making activity tied to AI initiatives. As the note put it: "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."
Bridgewater's assessment frames AI spending as a powerful, economy-wide influence that is reshaping investment priorities and market behavior while carrying distinct inflationary and financial stability risks. The firm highlighted several channels - infrastructure such as data centers, semiconductors and power consumption - through which AI capex is already having measurable effects on corporate budgets and market valuations.
Summary
Bridgewater's co-CIOs say relentless corporate AI spending is driving capital allocation changes across industries, supporting equity gains and risking higher input prices and bubble-like conditions.