Bridgewater Associates founder Ray Dalio said the AI market is showing "classic" signs of a bubble. He spoke at the Forbes Global CEO Conference in Singapore on October 7.
Dalio said the bubble is close to the point where it could burst. His comments came as markets were already under pressure from high bond yields and heavy tech spending.
Debt, Rates and AI Spending
Dalio said bubbles usually end when paper wealth has to be turned into cash. This can happen through taxes, margin calls, or loan payments.
"Everybody says I'm worth a billion dollars, but OK, try to spend that," he said. "In order to spend that, you have to sell wealth in order to get money, and so the bubble usually pricks at that."
He was clear about where he thinks markets stand. "We're in the part of the cycle that is before that but approaching that. I think we're close to that," Dalio said.
Dalio has also warned separately about a wider debt problem. He has said it could lead to a financial crisis within two to three years.
A signaled Federal Reserve rate pause in October gave markets a short break. However, borrowing costs remain high.
Dalio said the AI boom is being supported by capital spending funded with debt. This is happening while borrowing costs are climbing.
One example is Anthropic's compute deal with SpaceX. According to reports, Anthropic agreed to pay up to $84.5 billion for computing power through 2029.
When bond yields rise, large commitments like this become harder to support. Higher rates raise the cost of the debt used to fund them.
Fundraising goals in the AI sector remain large. OpenAI is reportedly seeking a $1.4 trillion valuation in a $30 billion raise ahead of a planned 2027 IPO.
Anthropic is reportedly targeting a $2 trillion valuation in a raise of up to $100 billion.
Dalio Prefers Gold Over Bitcoin
Dalio has often pointed to hard assets as protection. He has previously recommended holding 10 to 15% in gold and a smaller amount of Bitcoin as a hedge against U.S. debt stress.
His more recent view favors gold over Bitcoin. He has cited Bitcoin's exposure to hacks and regulatory risk.
Under that view, Bitcoin could fall alongside tech stocks if the AI bubble unwinds. Any safe-haven demand for it might only come later.
Dalio's Singapore comments repeat a theme he has raised before. This time, his language about timing was more direct.
Crypto markets were already reacting to these economic pressures. About $300 million in crypto positions were liquidated within a four-hour window.
Bitcoin traded near $81,000 around the time of Dalio's comments in Singapore.
