(HedgeCo.Net) At the heart of Chicago’s trading district, Balyasny Asset Management — a multistrategy powerhouse managing nearly US$29 billion — is calling attention to what many in the hedge-fund world are only beginning to discuss: the risk that artificial intelligence (AI) could trigger underappreciated turmoil in markets next year. Wikipedia+1

In remarks delivered at the Abu Dhabi Finance Week, Balyasny’s managing partner and Chief Investment Officer Dmitry Balyasny identified “AI disruption” as potentially the largest tail-risk heading into 2026. He argued that while AI continues to fuel growth in technology and data sectors, uneven adoption, regulatory backlash, or over-optimistic earnings baked into valuations could ripple through equity, credit, and macro markets. Reuters

The warning comes even as Balyasny’s own funds performed solidly: reporting a 2.5% return in November and roughly 15.3% for the year so far. For a fund of its size and strategy breadth, those are respectable numbers — but Balyasny’s message was clear: discipline and risk awareness remain vital. Reuters+1

In an era when many hedge funds tout AI and machine-learning-driven strategies as a competitive edge, Balyasny’s caution is notable for its counter-intuitive tenor. He argued that investors should not forget about the downsides — especially in a time of macro uncertainty, rising rates, geopolitical friction, and shifting policy regimes globally. According to him, the same AI frenzy that pushes stock prices up could, if expectations go unmet, trigger sudden sell-offs or cascade effects across asset classes.

For investors, the implication is clear: hedge funds with deep secular convictions in AI may want to hedge — either by keeping diversified exposures or reducing directional bets. Meanwhile, multi-strategy funds like Balyasny that emphasize flexibility and risk control may see increased demand, as institutional allocators seek refuge from concentration risk.

In short: the AI-driven boom is far from over, but Balyasny is signaling that 2026 might test which firms are built to survive it — and which may buckle under the weight of their own hype.