It looks to me like we are now at the brink of a new era in which machine thinking will supplement or surpass human thinking in many ways, like how machine labor supplemented and surpassed human labor during the Industrial Revolutions. Just as we saw that doing math in our heads and remembering facts became much less important with the invention of computerized tools that do these things, and just as we have gone to Google (or its equivalents) to find information rather than gathering information in more traditional ways, we will soon be going to computers to get our instructions on what to do when we are in different situations because the computer will come up with better guidance more quickly than we can.
Over the next five years, we will see dramatic advancements in most areas. Creating the AI capabilities is just the beginning of the AI applications. I know that in my area of investing where I and Bridgewater have been doing AI investing through expert systems for decades, the opportunities that are being developed are nearly unbelievable. The days of people making decisions in their own heads are ending. I and others at Bridgewater have experienced and capitalized on this (r)evolution via the computerization of investment decision making, so I’m excited by what will be happening.
Because these technologies will impact almost everything, there will be exceptionally big differences between the performance levels of countries, investors, and companies who use them well. Those who know how to use these tools effectively will be rewarded, and those who fail to do so will be penalized. It is worth noting, however, that from an investment perspective, it is not totally clear how much money will come in relative to the costs that will go out to invest in and create these new technologies.
The US and China are now the main competitors in designing these powerful new technologies, and how effective they are will have big impacts on their economic and military powers, though several countries are also developing and benefiting from these new technologies. While the US is ahead of China in developing the most advanced semiconductor chips and weak in its production of them, China is close behind in the development of advanced chips, ahead in producing less advanced chips much less expensively, and ahead in deploying AI. There will certainly be a lot of effort from both sides to gain an advantage over the other in this race, both by stealing/borrowing what the other side has and trying to defend one’s own gains. I keep in the mind the principle that by and large, intellectual property protections don’t work. While deep secrets that are protected with great effort (like the development of the atomic bomb) might be able to be kept hidden, anything that is openly used can almost instantly be replicated. Also, legal systems do a poor job of enforcing intellectual property protections. For these reasons, we should assume that most good ideas that are openly shown and are liked a lot will be replicated in about six months.
I should also make clear that AI isn’t the only important technology shaping the relative power of nations. There are many technologies beyond chips and AI that the US and China are the main real competitors in, including quantum computing, gene editing and other biotech, robotics, space, etc. China, which is home to 20 of the 40 best computer science programs in the world, is a formidable adversary to the US in the technology competition.
In conclusion, I am very excited and optimistic about the revolutionary improvements that are likely to take place as the result of inventive/practical people being put together with capital that gets them the resources that they need (perhaps most importantly, these new AI technologies) and operating in great environments that are conducive to advancement. Of course, new technologies are double-edged swords. For example, they have advanced how we can do each other harm as well as how we can do each other good.
From How Countries Go Broke by Ray Dalio, published on June 3, 2025, by Avid Reader Press, a division of Simon & Schuster. Copyright © 2025 by Ray Dalio.
Ray Dalio is an author, global economist, and founder and CIO mentor at Bridgewater Associates, the world’s largest hedge fund.
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