The SpaceX boss appeared at the South by Southwest (SXSW) media festival in Austin, Texas over the weekend as part of a panel discussion with Jonathan Nolan, co-creator of HBO sci-fi series 'WestWorld'.
Musk, 46, said: "AI scares the hell out of me... AI is capable of vastly more than almost anyone knows and the rate of improvement is exponential...
"I think the danger of AI is much greater than the danger of nuclear warheads. By a lot. And nobody would suggest that we should allow people to just build nuclear warheads if they want. That would be insane."
The billionaire businessman - famous for his phallic spacecrafts and for his past relationships with actresses Cameron Diaz and Amber Heard - said he was was not hopeful for the future of Earth, and suggested the human race needs to establish itself on other planets in order to survive.
As well as predicting "another Dark Age", Musk stressed that if another World War were to take place, we must ensure that "there's enough of a seed of human civilisation to bring human civilisation back".
He added: "It is time to go forth and become a star-faring civilisation, be out there among the stars and to expand the scale of human consciousness.
"I find that incredibly exciting, that makes me glad to be alive. I hope you feel the same way."
The space engineer revealed he believes the first return trip to Mars is just a year away.
He explained: "We are building the first ship, the first Mars - or interplanetary - ship, right now. And I think we'll be able to do short up and down flights in the first half of next year."
The entrepreneur hopes to colonise the planet and set up industry there, and quipped: "I think Mars should really have a great bar. The Mars Bar."