BlackRock (BLK) CEO Larry Fink warned on Monday that while most wealth has gone to asset owners, AI could worsen wealth inequality unless more people share in market growth.
“The old model of global capitalism is fracturing,” wrote Fink in the asset management giant’s annual chairman letter to investors.
He highlighted that while countries are spending enormous sums to become self-reliant in energy, defense, and technology, “the vast majority of wealth has flowed to people who owned assets, not to people who earned most of their money by working.”
“Now AI threatens to repeat that pattern at an even larger scale — concentrating wealth among the companies and investors positioned to capture it,” he added. “This is where much of today’s economic anxiety comes from: a deeper feeling that capitalism is working — just not for enough people.”
Fink points out that transformative technologies create enormous value for the companies that build and deploy them, and to the investors who own them.
He also notes artificial intelligence is leading to “K-shaped” outcomes where leading firms pull ahead while others struggle. For example, Walmart (WMT) recently reached an all-time high valuation about two weeks after the luxury retailer Saks filed for bankruptcy.
Read more: What is a ‘K-shaped’ economy, and what’s causing the divide?
“When market capitalization rises but ownership remains narrow, prosperity can feel increasingly distant to those on the outside,” wrote Fink.
Although the US has one of the highest market participation rates in the world, roughly 40% of the population still has no exposure to the capital markets. Abroad, participation rates are even lower.
“Billions watch their economies grow from the outside, as renters rather than owners — putting their savings in bank accounts that earn little, rather than investing to share in the growth around them,” said Fink.
His advice: Stay invested in the markets for the long term, because “over time, staying invested has mattered far more than getting the timing right.”
Over the past two decades, every dollar invested in the S&P 500 (GSPC) grew more than eightfold, noted Fink, highlighting how some of the market’s strongest days came amid the most unsettling headlines.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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