Ray Dalio says AI investors think they’re betting on technology but 'that’s not true.' Why most stocks may not survive

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Artificial intelligence has quickly become one of the most crowded trades on Wall Street, with investors pouring billions into companies tied to everything from large language models to semiconductor chips.

But billionaire investor Ray Dalio says many investors may be misunderstanding what they’re actually buying.

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“What a lot of people don’t realize in bubbles is that through all technologies, they think that they are betting on the technology when they buy the stocks in the companies,” Dalio said in a recent X short from The All-In Podcast (1). “That’s not true.”

“There’s a giant difference between the behavior of companies and the behavior of the technologies,” Dalio explained. “The norm is … a lot of companies won’t survive in the start. Very small percentage.”

That gap between a transformative technology and the companies racing to profit from it can create the conditions for a bubble to form.

And it’s not just theory. Similar patterns played out during past tech booms, such as the dot-com bubble, where groundbreaking innovations ultimately changed the world and wiped out many early investors along the way (2).

You’re not betting on AI — you’re betting on companies

Dalio’s warning hinges on a simple distinction: Technology can succeed spectacularly while the majority of companies built around it fail.

That dot-com era is one of the clearest examples. While the internet went on to reshape the global economy, many early internet companies collapsed after valuations surged beyond sustainable levels.

Even today’s tech giants emerged from a much larger field of competitors that didn’t survive. Companies like Amazon beat the dot-com crash, but many others disappeared entirely.

Investor enthusiasm has pushed valuations higher across the tech sector, particularly in companies tied to chips, cloud infrastructure and generative AI tools. According to Goldman Sachs, generative AI could boost global GDP by about 7% over the next decade (3), indicating the amount of capital flowing into the space.

However, when too much money chases a single theme, it can lead investors to overpay for portfolio exposure to that technology vertical. This is especially true when it’s unclear which companies will ultimately dominate the space.

That’s exactly the risk Dalio is pointing to: Even if AI transforms the industry, it doesn’t guarantee that today’s most popular stocks can sustain momentum into the future.

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Why bubbles form around breakthrough technologies

Periods of rapid technological change have a long history of attracting intense investor interest and, in some cases, speculation.

During the late 1990s, for example, investors poured money into internet-related companies, many of which had little or no profit. When the dot-com bubble burst, many of those firms failed, even as the internet itself went on to reshape the global economy.

That dynamic — strong belief in a technology paired with uncertainty about which companies will succeed — can make it difficult for markets to price assets accurately.

The International Monetary Fund has warned that artificial intelligence is already reshaping financial markets and could increase the speed and scale of price movements as markets react to new information (4).

In fast-moving environments like this, expectations can shift quickly. When those expectations outpace what companies can actually deliver, valuations can become disconnected from economic reality (5).

For investors, the challenge isn’t just identifying whether a technology will succeed; it’s determining which companies, if any, will translate that success into durable profits.

How investors try to separate winners from hype

If only a small number of companies ultimately succeed, picking the right ones becomes more important and more difficult.

Even professional investors struggle to consistently identify long-term winners in emerging sectors, especially early in a technology’s lifecycle when business models are still evolving.

That’s led many individual investors to rely on platforms and tools to research companies, track markets and build exposure over time.

Platforms like Robinhood are designed to make investing simpler and more approachable.

If you prefer a more hands-on approach, you can also buy and sell individual stocks, fractional shares and options (for qualified traders) — backed by 24/7 support. Stocks, ETFs and their options trades are commission-free.

With access to popular ETFs like the Vanguard S&P 500, you can build diversified exposure without needing to pick individual stocks.

The platform also offers both a traditional IRA and a Roth IRA, so you can choose the tax strategy that fits your retirement plan.

With its recurring investment feature, you can set up automatic investments of your preferred fractional shares, stocks and ETFs on your own schedule.

Over time, this helps make investing a habit and steadily grows your portfolio.

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Some investors hedge against tech bubbles altogether

If the outcome of a fast-moving technology cycle is uncertain, some investors look beyond the sector entirely.

Gold, for example, has long been viewed as a hedge during periods of economic and market uncertainty. Investors often turn to the metal during times of volatility, as it’s widely considered a “safe haven” asset (6). The precious yellow metal is also currently experiencing a pullback after a banner year in 2025, making for a much lower entry point for investors looking to buy the dip.

One way to invest in gold while also providing significant tax advantages is to open a gold IRA with Priority Gold.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to hedge their retirement funds against economic uncertainty.

To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases. Just remember that gold is typically best as one part of a well-diversified portfolio.

Why diversification matters more in an AI-driven market

Dalio has long emphasized diversification as a core principle of investing, arguing that balancing different assets is one of the most effective ways to manage risk in uncertain environments.

In a rapidly evolving sector like AI, investing principles are extremely important. Rather than betting on a single winner, many investors spread their exposure across different assets, industries and strategies to reduce risk.

A financial advisor can help crunch the numbers and build a plan that works. But hiring an advisor can be a lifelong commitment, which might make or break your retirement. That’s why finding reliable advisors is crucial.

And that’s where Advisor.com comes in. The platform connects you with an expert near you for free who can help you choose the right investments.

Advisor.com does the heavy lifting for you, vetting advisors based on track record, client ratios and regulatory background. Plus, their network comprises fiduciaries, who are legally required to act in your best interests.

Just enter a few details about your finances and goals and Advisor.com’s AI-powered matching tool will connect you with a qualified expert best suited for your needs based on your unique financial goals and preferences.

Finding the right advisor isn’t always easy — there’s no one-size-fits-all solution. That’s why Advisor.com lets you set up a free initial consultation with no obligation to hire to see if they’re the right fit for you.

Take a more hands-on approach

If you prefer to take the investing bull by the horns on your own, Moby offers expert research and recommendations to help you identify strong, long-term investments backed by advice from former hedge fund analysts.

In four years and across almost 400 stock picks, their recommendations have beaten the S&P 500 by almost 12% on average. They also offer a 30-day money-back guarantee.

Moby’s team spends hundreds of hours sifting through financial news and data to provide you with stock and crypto reports delivered straight to you. Their research keeps you up-to-the-minute on market shifts and can help you reduce the guesswork behind choosing stocks and ETFs.

Plus, their reports are easy to understand for beginners, so you can become a smarter investor in just five minutes.

Technology can succeed without rewarding investors

Dalio’s core message is straightforward: A technology can succeed without rewarding the majority of investors chasing it.

Artificial intelligence may transform industries and drive economic growth for years to come. But that doesn’t guarantee that today’s most popular companies will ultimately benefit.

For investors, the challenge isn’t just recognizing the potential of AI — it’s navigating the uncertainty that comes with it.

And in markets like this, discipline, diversification and a clear strategy can matter just as much as picking the right trend.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Ray Dalio (1); Corporate Finance Institute (2); Goldman Sachs (3); International Money Fund (4); Washington Crossing Advisors (5); Investopedia (6)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.