Ray Dalio Warns AI Sector Is Classic Bubble

Ray Dalio, founder of Bridgewater Associates, warned that the artificial intelligence sector is a classic bubble nearing its bursting point. Speaking at the Forbes Global CEO Conference in Singapore on Wednesday, Dalio stated that the sector is heavily funded by debt, leaving it vulnerable as interest rates climb and bond yields reach decade-highs.

Dalio noted that a potential need to convert unrealized wealth into cash, possibly driven by wealth taxes, could further trigger a collapse. These warnings contrast with current market trends, as optimism over technology earnings recently pushed the S&P 500 and Nasdaq 100 indexes to record highs despite the increasing cost of building AI infrastructure.