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Ray Dalio warns AI technology cycles can spark market bubbles
Dalio links potential AI fallout to companies using debt or equity to fund AI buildouts, arguing stress could force sales when obligations become burdensome.
Billionaire Ray Dalio, founder of Bridgewater Associates, said major technology shifts tend to generate bubbles because participants cannot get outcomes exactly right, leading to aggressive spending or losing market share, according to remarks discussed by The Motley Fool.
Dalio made the comments in an interview at the Forbes Iconoclast Summit in New York City on June 3, where he addressed themes including global debt, the bond market, and the risk of an AI bubble.
He did not give a specific date for when an AI bubble might burst, but he argued that the bubble could be “pricked” when debt obligations become harder to carry, particularly as influential businesses fund AI build-outs through debt and or equity offerings.
In that scenario, Dalio said the need to sell wealth to access funds for servicing obligations is when “things break,” tying his bubble framework to the interaction between AI spending and corporate financing conditions.