Ray Dalio Warns AI Boom Is Nearing a Potential Bubble-Bursting Point

Bridgewater Associates founder Ray Dalio warned that the artificial intelligence boom is approaching a potentially dangerous stage, citing mounting debt, rising interest rates and pressure to convert paper wealth into cash.

Bridgewater Associates founder Ray Dalio warned at a Singapore business conference that rising debt and interest rates could put pressure on the AI investment boom.

Speaking at the Forbes Global CEO Conference in Singapore, Dalio described the AI investment surge as a “classic bubble” that could be approaching a turning point, according to Bloomberg News.

He said technology companies were taking on substantial debt to finance AI infrastructure and that higher borrowing costs could increase financial pressure.

“We're in the part of the cycle that is before that but approaching that,” Dalio said. “I think we're close to that,” according to Bloomberg.

Dalio also identified the possibility that wealth taxes or other policies requiring investors to sell assets could put pressure on highly valued investments.

He argued that investors who hold substantial paper wealth must sell assets to obtain cash for spending or tax obligations.

His comments come as major technology companies increase spending on AI chips, data centers and other infrastructure, with some turning to bond markets to finance their investments.

The scale of borrowing has raised concerns among some analysts about the sustainability of AI valuations and the possibility that investment returns may fall short of expectations.

Dalio's comments represent his assessment of market risks, not a prediction that an AI market crash is certain or imminent.