Bridgewater Associates founder Ray Dalio said on Oct. 7 that artificial intelligence has become a "classic bubble" and is moving closer to a breaking point. According to Dalio, a large amount of debt is currently being used to finance AI, leaving the sector exposed as interest rates continue to rise. He said the market is now in a phase of the cycle that is approaching that point, adding that he believes it is already very close.
Dalio also pointed to cash-conversion pressure as another risk. He said wealth taxes and other measures aimed at turning unrealized gains into cash could help trigger a downturn. In his view, asset holders may appear wealthy on paper, but spending that wealth often requires selling assets for cash, and that process can become the spark that bursts a bubble. His comments frame AI not simply as a high-growth theme, but as one increasingly vulnerable to tighter financial conditions and forced liquidity needs.
Bridgewater Associates founder Ray Dalio warned on Oct. 7 that artificial intelligence is a "classic bubble" and is getting closer to a breaking point, according to BlockBeats.
Dalio said a large amount of debt is currently being used to fund AI. As interest rates keep rising, he said, the bubble could begin to break at that stage of the cycle. "We are in the part of the cycle that is getting close to that point, and I think we are very close to it," he said.
He added that other factors could also trigger a break, including wealth taxes and other measures designed to turn unrealized gains into cash. "Everybody says, 'I am worth $1 billion,' but the problem is that to spend that wealth, you have to sell assets for cash, and that is often the trigger that causes bubbles to burst," Dalio said.
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