Dalio Warns: AI Boom Shows Signs of a Bubble, Day of Reckoning Will Be the Time of Burst

Source: Jinshi Data

Ray Dalio, founder of Bridgewater Associates, has issued a warning about market risks surrounding the capital frenzy driven by artificial intelligence, believing the current situation already shows typical bubble characteristics and anticipates that this phase will ultimately end.

In an interview with Bloomberg Television on Wednesday, Dalio pointed out that waves of technological change are often accompanied by excessive capital inflows. "All great technological revolutions create bubbles," he said, while emphasizing that it is difficult for investors to precisely gauge the scale of investment; companies either invest heavily regardless of cost to capture the market or lose their competitive position due to insufficient investment.

This judgment comes against the backdrop of a significant surge in AI-related assets. Driven by demand for data center construction, especially for high-bandwidth chips, chip companies have become a core target for Wall Street capital, propelling the overall market to new highs repeatedly. Alongside this rally, there has been intense internal market debate over whether valuations have become overheated.

NVIDIA CEO Jensen Huang recently expressed a different stance publicly. In his remarks this week, he stated that investors willing to bet on the AI wave will receive "crazy" returns.

In a speech the previous day, he also responded to concerns about valuations. Addressing voices worried that massive investments in data centers might fail to yield returns, he mentioned: "Remember last year when we gathered, the talk and narrative around this investment were all asking: What's the return on investment (ROI)?" He then countered: "Now give me an example, find me a crazy person who's still saying that. They would sound crazy."

In contrast, Dalio is more focused on the risks at the stage when profits need to be realized. He believes that once the market enters the stage where investments must translate into actual earnings, bubbles often show signs of bursting. "The process of popping the bubble is essentially the process of converting paper wealth into cash," he said, expressing concerns about the future profitability of some AI companies. Although he acknowledges that AI itself holds significant value, he also bluntly stated that the current market trend "is going down that same path."

Dalio, 76, is the founder of Bridgewater Associates, one of the world's largest hedge funds. He completed his full exit from the company in 2025, including selling all remaining shares and resigning from the board. According to the Bloomberg Billionaires Index, his personal net worth is approximately $21.5 billion.