Bridgewater's Ray Dalio: As wealth turns into cash, the AI bubble will eventually burst

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Billionaire Ray Dalio says the booming artificial intelligence market is already showing signs of a bubble, which will eventually burst.

Dalio, founder of Bridgewater Associates, said in an interview on Wednesday:

"All major technological revolutions give rise to bubbles. No one can perfectly time the cycle. Either you pour huge capital to grab market share regardless of over-investment, or you lose market share due to insufficient investment."

Driven by the demand for high-bandwidth chips required by AI data centers, chipmakers have become the hottest stocks on Wall Street, pushing the market to new record highs. This surge has triggered debate among investors about whether they are buying into an overheated market.

NVIDIA CEO Jensen Huang tried to ease concerns this week, saying that investors willing to bet on the AI boom will reap "crazy" returns.

Dalio said the bubble will burst when investments need to be converted into cash, pointing out concerns about the profitability of AI companies. "The process of bursting a bubble is the process of converting wealth into money," he said. The current AI-driven market "is developing along this trajectory, even though it is an extraordinary technology."

Dalio is the founder of Bridgewater Associates, one of the world's largest hedge funds. Now 76, he will have fully exited Bridgewater by 2025, selling his remaining stake and leaving the board. According to the Bloomberg Billionaires Index, his net worth is $21.5 billion.

To be updated...

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