Key Takeaways
- • Ray Dalio, founder of Bridgewater Associates, said the AI bubble is nearing the point where it could burst, citing rising interest rates and heavy corporate borrowing to fund AI infrastructure.
- • Dalio said he is "in the part of the cycle that is before that but approaching that," speaking at the Forbes Global CEO Conference in Singapore.
- • Global bond yields have reached their highest levels in decades, with the U.S. 10-year Treasury yield at its highest since 2002, raising borrowing costs for AI-related spending.
- • Dalio also flagged a wealth tax and efforts to convert paper gains into taxable income as possible triggers, arguing that paper wealth is hard to spend.
- • Dalio first warned about an AI bubble in June, when he said "all great technology changes produce bubbles."
Summary
Hedge fund billionaire Ray Dalio said the artificial intelligence bubble is approaching the point where it could burst, as rising interest rates and heavy borrowing by technology companies put pressure on the sector. Speaking at the Forbes Global CEO Conference in Singapore on Wednesday, Dalio said, "we're in the part of the cycle that is before that but approaching that," referring to the stage at which a bubble begins to unwind. He described the current conditions as a "classic bubble," pointing to the large volume of debt companies are raising to finance AI infrastructure buildouts. As rates continue to climb, he said, that debt load becomes the point at which the bubble is likely to break.
Dalio's remarks come as global bond yields have reached their highest levels in decades. The U.S. 10-year Treasury yield has reached its highest level since 2002, lifting borrowing costs for the capital-intensive AI spending now underway across major technology companies. Investor concern has grown that the revenue generated by AI will not justify the scale of that investment, though optimism around key technology names has kept the S&P 500 and Nasdaq 100 higher, according to Forbes.
Dalio also cited other possible triggers, including a wealth tax and attempts to convert paper profits into taxable income. He argued that many holders of paper fortunes cannot readily access that value, saying, "everybody says 'I'm worth a billion dollars' but ok, try to spend that." Dalio founded Bridgewater Associates, which he has described as the world's largest hedge fund. Forbes' Real-Time Billionaires list put his net worth at $18.9 billion, ranking him 145th globally as of Wednesday morning. The warning is not new: in June, Dalio said the AI market showed signs of a bubble that could eventually pop, adding that "all great technology changes produce bubbles," and that companies either spend heavily to capture market share or underspend and lose it.
Dalio's remarks come as global bond yields have reached their highest levels in decades. The U.S. 10-year Treasury yield has reached its highest level since 2002, lifting borrowing costs for the capital-intensive AI spending now underway across major technology companies. Investor concern has grown that the revenue generated by AI will not justify the scale of that investment, though optimism around key technology names has kept the S&P 500 and Nasdaq 100 higher, according to Forbes.
Dalio also cited other possible triggers, including a wealth tax and attempts to convert paper profits into taxable income. He argued that many holders of paper fortunes cannot readily access that value, saying, "everybody says 'I'm worth a billion dollars' but ok, try to spend that." Dalio founded Bridgewater Associates, which he has described as the world's largest hedge fund. Forbes' Real-Time Billionaires list put his net worth at $18.9 billion, ranking him 145th globally as of Wednesday morning. The warning is not new: in June, Dalio said the AI market showed signs of a bubble that could eventually pop, adding that "all great technology changes produce bubbles," and that companies either spend heavily to capture market share or underspend and lose it.
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