Ray Dalio says most AI investors are misguidedly betting on the wrong thing — and that mistake could cost Canadians dearly

“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).

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

It’s a warning to investors everywhere — including Canadians navigating a moment when AI-linked stocks are generating both enormous excitement and uneasiness.

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

Dalio’s main argument is straightforward: A technology can transform the world while the majority of companies built around it collapse.

The dot-com era of the turn of the century is the perfect example. The internet changed everything — but not before a wave of early internet companies collapsed after their valuations grew far beyond what the businesses were worth (2). Even today’s tech giants — companies like Amazon, for example — survived a field of competitors that disappeared entirely.

Dalio has publicly stated he views the current AI boom at approximately 80% of the euphoria that preceded either the 1929 stock-market crash or the 2000 dot-com bubble.

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), showing how much capital AI tech has generated.

But when too much money chases a single movement, it can lead investors to overpay for exposure to a particular vertical — especially when it’s unclear which companies will ultimately dominate.

For Canadian investors, this story hits closer to home than it may seem. While the TSX is less concentrated in pure-play AI stocks than U.S. markets, Canadians with broad index or tech exposure aren’t immune. Some TSX-listed companies — including Celestica (TSX: CLS), Kinaxis (TSX: KSX), and OpenText (TSX: OTEX) — have seen significant valuation hikes based on AI-related confidence (4). In Q4 2025, Celestica alone posted revenue growth of 44% year over year, driven by demand for AI infrastructure (5). Promising numbers don’t always mean a fair price. When investor enthusiasm outpaces what a company is really delivering, bubbles start forming.

Why bubbles form around breakthrough technologies

When technology undergoes rapid change, investors tend to pile in. Historically this has been true — and it doesn’t always go well.

During the late 1990s, 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 accurately price assets.

The International Monetary Fund (IMF) has warned that AI is already reshaping financial markets and could increase the speed and scale of price movements as markets react to new information (6). In fast-moving environments like this, expectations can shift quickly. When those expectations outpace what companies are able to deliver, valuations can become disconnected from economic reality (7).

For investors, the challenge isn’t in successfully predicting a technology’s success — it’s determining which companies, if any, will translate that success into lasting profits.

Some investors hedge against tech bubbles altogether

If the outcome of a fast-moving technology cycle is unclear, some investors look toward other investment options.

Gold, for example, has long been viewed as a hedge during periods of economic and market uncertainty. Investors often turn to the precious during times of volatility, as it’s widely considered a safe-haven asset. Gold ended 2025 as one of the best-performing major asset classes, and Dalio himself noted it outperformed the S&P 500 by 47% that year (8).

For Canadians, getting gold exposure from inside registered accounts is straightforward. Gold ETFs — such as iShares Gold Bullion ETF (CGL) and the Royal Canadian Mint’s Exchange Traded Receipt (MNT) — can be held inside a TFSA or RRSP for either tax-free or tax-deferred growth, depending on the type of account (9).

Physical gold bullion can also be held in an RRSP provided it meets the Canada Revenue Agency (CRA)’s purity standards (99.5% for gold) and is purchased through an accredited refinery or financial institution (10). While you can hold gold-backed ETFs in a TFSA, directly holding physical bullion generally isn’t permitted and can trigger a 50% penalty tax (11).

As with any asset, gold is typically best used as one part of a well-diversified portfolio, rather than as a single strategy.

Why diversification matters more in an AI-driven market

Ray Dalio has spent decades driving home one main idea: Spread your portfolio across different types of assets. It’s one of the more reliable ways to protect yourself when markets get unpredictable.

In a fast-moving sector like AI, that discipline becomes more important. Rather than betting everything on one company or trend, spreading your money across different assets, industries and strategies is a smarter way to manage the risk.

A financial advisor can help build a plan that works for your specific situation, and it’s recommended that anyone seeking professional investment guidance check their advisor’s credentials. The CIRO AdvisorReport, available for free through CIRO’s website, lets you look up whether a financial professional is registered and in good standing with a CIRO-regulated investment dealer (12).

Moreover, the Certified Financial Planner (CFP) designation, administered by FP Canada, is the gold standard for financial planning advice in Canada. If your needs include investments, tax strategy and retirement planning, it’s the credential worth looking for (13).

What Canadian investors can do now

Whether you’re already invested in AI-linked stocks, or simply trying to figure out where you stand, here are practical steps to consider:

Review your concentration. If a large share of your RRSP or TFSA is held in a small number of technology companies — or in funds heavily weighted toward U.S. mega-cap tech — consider whether that concentration reflects your situation or risk tolerance.

Use registered accounts strategically. TFSA gains are completely tax-free, making it an ideal home for higher-growth — and higher-risk — positions. RRSP contributions reduce taxable income today and grow tax-deferred. Using each account for the right assets can improve long-term after-tax outcomes.