Ray Dalio warns of potential AI bubble burst

Ray Dalio, founder of Bridgewater Associates, has issued a warning regarding a potential ‘classic AI bubble’ that could burst. Speaking at the Forbes Global CEO Conference in Singapore, Dalio suggested that the massive amounts of debt being used to finance artificial intelligence, combined with rising interest rates, are creating a precarious economic environment.

Dalio noted that the 10-year yield has risen to 5.368 percent, a level not seen since 2002. He attributed this trend to several compounding factors, including increasing government debt burdens, trade fragmentation, war-driven inflationary pressures, and the significant capital requirements for AI infrastructure. These elements are collectively reducing the availability of global savings and driving up real interest rates, which may force investors to convert assets into cash.