Dalio warns: The AI boom already exhibits bubble characteristics; the day of realization will be the moment it bursts.

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Source: Jintou Data

Regarding the capital boom driven by artificial intelligence, Ray Dalio, founder of Bridgewater Associates, issued a warning about market risks, believing that the current situation has shown typical bubble characteristics and predicting that this phase will eventually end.

In an interview with Bloomberg Television on Wednesday, Dalio pointed out that technological waves are often accompanied by excessive capital inflows. “All great technological revolutions tend to create bubbles,” he said, emphasizing that investors find it difficult to accurately gauge the scale of investment, with companies either investing heavily to seize market share or losing their competitive position due to underinvestment.

This judgment comes amid a significant rise in AI-related assets. Driven by demand for data center construction, especially the surge in demand for high-bandwidth chips, chip companies have become the core targets of Wall Street funds, pushing the overall market to new highs repeatedly. Along with this rally, there is intense internal debate about whether valuations have become overheated.

Nvidia CEO Jensen Huang recently expressed a different stance publicly. In his speech this week, he stated that investors willing to invest in the AI wave will receive “crazy” returns.

In a speech the day before, he also responded to valuation concerns. Regarding those worried that massive data center investments may not yield returns, he mentioned, “Remember last year when we gathered together, the discussions and narratives around this investment all asked: what is the return on investment (ROI)?” He then asked back, “Now give me an example, show me which crazy person is still talking like that. They sound like they’re crazy.”

In contrast, Dalio is more concerned about the risks during the profit realization phase. He believes that once the market enters a stage where investments need to be converted into actual returns, bubbles tend to show signs of bursting. “The process of bursting a bubble is actually the process of converting paper wealth into cash,” he said, expressing concerns about the future profitability of some AI companies. Although he recognizes the significant value of AI itself, he also bluntly stated that the current market trend “is repeating such a pattern.”

Dalio, aged 76, is the founder of Bridgewater Associates, one of the world’s largest hedge funds. He completed a full exit from the firm in 2025, including selling all remaining shares and resigning from the board. According to the Bloomberg Billionaires Index, his personal net worth is approximately $21.5 billion.