Ray Dalio, founder of Bridgewater Associates, warned that the global economy will face a dangerous situation in the next one to two years, but he advised investors not to hastily exit artificial intelligence investments solely due to high valuations, but rather to focus on substantive signals of a bubble burst.
In an interview with CNBC on Monday, Dalio stated that, influenced by the叠加 of three major cycles—debt, political conflict, and geopolitics—cracks have already appeared in multiple areas of the current market, including private equity, venture capital, and debt undergoing refinancing.
Dalio pointed out that the global debt burden has begun to exert pressure on parts of the market, with governments unable to either increase taxes or cut benefits, leading to fiscal difficulties. This structural contradiction is exacerbating domestic political polarization, and the rise of left-wing and right-wing populism signifies irreconcilable divisions.
As the 2026 U.S. midterm elections approach, Dalio expects political conflicts to intensify further. The high-interest-rate environment and the concentration of market leadership are further aggravating this fragility.
Investment Strategy in a Bubble
Dalio believes the current bubble is similar to the 2000 tech bubble but not as severe as that of 1929.
While acknowledging that the AI industry has entered bubble territory, Dalio emphasized that investors should not rush to exit merely due to rising valuations. He stated that historically, all bubbles have occurred during periods of dramatic technological change, and the key is to identify the signals of a bubble burst.
He noted that the catalyst for a bubble burst typically comes from monetary tightening or forced asset sales to meet debt obligations.
Recently, several market participants have issued warnings about the AI bubble, including OpenAI CEO Sam Altman, who also hinted at signs of a bubble in the market. Investor Michael Burry, who accurately predicted the 2008 subprime mortgage crisis, expects the AI market bubble to potentially collapse within the next two years.
Dalio specifically advised paying attention to pressures in the venture capital, private equity, and commercial real estate sectors, where low-cost debt is facing difficulties refinancing at higher interest rates.
The Middle East's Rise as the 'Silicon Valley for Capitalists'
While warning of risks, Dalio compared the rise of some Middle Eastern countries to Silicon Valley, stating that the region is rapidly becoming one of the world's most influential AI hubs.
He stated that the UAE and its neighboring countries are combining vast capital pools with an influx of global talent, attracting investment managers and AI innovators. Dalio said:
There is a kind of vitality here, much like in San Francisco, and the atmosphere surrounding AI and technology is very similar.
He described the UAE as a "paradise in a turbulent world," praising its leadership, stability, quality of life, and ambition to build a globally competitive financial ecosystem.
The UAE and Saudi Arabia have launched projects worth tens of billions of dollars this year to build cloud computing, data centers, and other AI infrastructure, supported by sovereign wealth capital and global technology partners.
A $10 billion agreement announced this year between Google Cloud and Saudi Arabia's Public Investment Fund aims to create a "global AI center" in the country. Earlier this year, OpenAI, Oracle, NVIDIA, and Cisco joined forces to build a large "Stargate" data center campus in the UAE.
Dalio believes that the transformation of the Gulf region is the result of deliberate national strategy and long-term planning. He pointed out:
What they have done is cultivate talent. This region is becoming the Silicon Valley for capitalists. Now capital is flowing in, talent is flowing in.
