Published by Global Banking and Finance Review
Posted on December 9, 2025
1 min readLast updated: January 20, 2026
Dmitry Balyasny sees AI as the largest tail risk for 2026, with potential impacts on hedge funds and job markets.
ABU DHABI, Dec 9 (Reuters) - Hedge fund Balyasny Asset Management's managing partner said on Tuesday that the largest tail risk for the year ahead is if artificial intelligence surprises on the upside or the downside.
Dmitry Balyasny, managing partner and the firm's chief investment officer, said if there was a fall-off in demand and AI companies --- especially so-called hyper-scalers -- changed their spending plans because they did not achieve the monetization they needed, this would be a surprise to the downside.
Also, an outside risk the hedge fund manager was watching for was if the AI industry took off faster than expected, causing job losses before employees were able to retrain for other opportunities, he said during a fireside chat at Abu Dhabi Finance Week.
"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," he said.
Balyasny Asset Management manages $31 billion.
(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe)
Artificial intelligence (AI) refers to the simulation of human intelligence in machines programmed to think and learn. AI can perform tasks such as problem-solving, understanding natural language, and recognizing patterns.
A hedge fund is an investment fund that employs various strategies to earn active returns for its investors. Hedge funds can invest in a wide range of assets and often use leverage to enhance returns.
Tail risk refers to the risk of extreme market events that occur at the tails of a probability distribution. These events can lead to significant losses and are often difficult to predict.
Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings. It involves strategies to minimize potential losses and maximize opportunities.
Market capitalization is the total market value of a company's outstanding shares of stock. It is calculated by multiplying the current share price by the total number of shares outstanding.
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