Ray Dalio warns of AI bubble as market views diverge

Financial experts are divided on whether the artificial intelligence sector is approaching a market bubble. Ray Dalio, founder of Bridgewater Associates, warned that the AI trade shows “classic signs” of a bubble similar to the 1929 crash and the 2000 dot-com era. Dalio argues that rising interest rates and the increasing reliance on debt financing by hyperscalers—large firms investing heavily in AI infrastructure—are creating unsustainable conditions. He identified three specific risks: forced asset selling to raise cash, a surge in new stock supply, and rising retail leverage.

In contrast, DBS Group argues that AI-related stocks are not in bubble territory. DBS Chief Investment Officer Hou Wey Fook cited Nvidia’s earnings trajectory as evidence, noting a modest 12-month forward price-to-earnings ratio of approximately 17x. This stands in stark contrast to the dot-com era, when peak valuations reached roughly 100x earnings. DBS projects significant continued growth, forecasting that Nvidia’s revenue could climb 70% in fiscal 2028, supported by massive demand in the data-center segment.