Ray Dalio warns of potential AI bubble and Wall Street crash

Ray Dalio, founder of Bridgewater Associates, has issued a warning regarding a potential speculative bubble in the artificial intelligence market. Speaking at the Forbes Global CEO Conference in Singapore, Dalio noted that even major technology giants with significant cash flows are increasingly relying on debt to fund their AI investments.

Dalio suggested that rising interest rates from the Federal Reserve could increase the cost of this financing, potentially leading to a market correction. He observed that the market is currently in a cycle preceding such a moment, noting that increasing bond yields are making debt instruments more attractive to investors seeking safety. This shift could prompt investors to realize gains and increase their cash holdings, further pressuring the tech sector, which includes heavyweights like Nvidia, Apple, and Microsoft.