Hedge fund Balyasny Asset Management is warning that the world’s largest tail risk in the year ahead stems from artificial intelligence — both from a potential slowdown and from unexpectedly rapid acceleration. Speaking at Abu Dhabi Finance Week, Managing Partner and CIO Dmitry Balyasny outlined how AI could destabilize markets depending on how demand and monetization trends unfold.
Balyasny said that a surprise to the downside could emerge if AI adoption cools and major AI companies — particularly the hyperscalers — are forced to scale back spending. He noted that a key concern is if AI leaders “did not achieve the monetization they needed,” which could trigger abrupt shifts in investment plans and ripple effects across markets.
At the same time, the hedge fund chief cautioned that the opposite scenario could be equally disruptive. An unexpectedly fast acceleration in AI capabilities or adoption could trigger large-scale labor displacement before workers can retrain, creating near-term economic strain. He described this as another outside risk the firm is closely monitoring. As he put it, “Either of those scenarios could create some instability, but I think the more likely outcome is that it continues to grow the way that it has.”
Balyasny Asset Management, which oversees $31 billion, has been expanding globally and recently set up an office in Abu Dhabi. Balyasny said the city is still in early stages compared to hubs like New York and London, but it is quickly gaining momentum as a global financial center. He highlighted the region’s strong capital inflows, its appeal to international talent, and Abu Dhabi’s strategic push into AI and advanced technology.
The firm has also delivered strong performance this year, returning 2.5% in November and posting 15.3% gains year-to-date, according to Reuters.
As AI continues reshaping global markets and geopolitical priorities, Balyasny’s remarks underscore how both overperformance and underperformance in the sector could drive volatility — making AI one of the defining risk variables for 2025.
