Ray Dalio Sounds Alarm on AI Boom, Says Bubbles ‘Always Come Together’ With Major Innovation: South Korea, Taiwan Show Early Signs
Billionaire investor Ray Dalio said the current AI investment boom carries the same bubble dynamics seen in past technology booms, pointing to the late 1920s as a parallel.
In an interview on Bloomberg Television’s “Insight with Haslinda Amin,” aired Tuesday, the Bridgewater Associates founder said such bubbles “always come together” with major innovation, drawing on 500 years of market history he said he studied to recognize the pattern repeating today.
Wealth Versus Money
Dalio said the danger lies in the gap between wealth and money. “Wealth is in a sense easy to create but you can’t spend wealth,” he said, explaining that heavy borrowing to buy assets, or forces like a wealth tax that require selling assets for cash, can trigger a bubble to burst. He said that dynamic is “going on” currently, with markets not fully pricing assets correctly given how much of AI’s future value remains unknown.
Asia Shows Early Bubble Signs
Asked specifically about markets like South Korea and Taiwan, which have drawn heavy AI capital expenditure, Dalio said AI has been “fantastic” for productivity there but that those markets have gone beyond their own productivity needs and are now investing “all around the world,” creating what he called early signs of “bubbles beginning” and “bubbles bursting.” He said the risk is “not systemically threatening,” but cautioned that AI investment today is concentrated in a limited number of companies and has become “very expensive,” with uncertain future cash flows.
Dalio’s remarks build on warnings he raised last month on X, when he said “we are now in a bubble,” comparing AI to the railroads and Industrial Revolution. His comments also follow broader reporting on how hyperscalers’ spending — projected to approach $1 trillion in 2027 — is increasingly financed through debt and credit markets rather than equity alone, with some analysts warning that the pace of spending growth is what poses the real macro risk if demand falls short.
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