Bridgewater's Dalio Warns AI Bubble Is Near Bursting Point

At the Forbes Global CEO Conference in Singapore on Oct 7, Ray Dalio, founder of Bridgewater Associates, warned that artificial intelligence has become a classic bubble and is close to the bursting point as interest rates rise.

Dalio said a large amount of debt financing is flowing into AI, and higher rates will increase funding costs and trigger the bubble to burst. He noted that tech giants have invested hundreds of billions of dollars in AI, with funding increasingly reliant on debt, while market gains are concentrated in a few stocks. Global bond yields have climbed to multi-decade highs, raising the cost of financing massive AI infrastructure, yet stock valuations continue to climb, with the S&P 500 and Nasdaq 100 hitting record highs this week.

The Bridgewater founder said the market is still in the pre-burst phase but approaching the tipping point. Besides interest rates, policies such as wealth taxes and other measures that turn paper gains into cash could also trigger a crash. Dalio explained that paper wealth is hard to spend directly; converting it requires selling assets for cash, and bubbles often burst at that stage.

Dalio, who has repeatedly warned about AI bubble risks, made the remarks as optimism over tech earnings pushes major indexes to new highs.