October 7, 2026 — Singapore
Ray Dalio says AI is in a “classic bubble” that is nearing its bursting point, arguing that debt-fueled AI spending and rising borrowing costs are pushing the market toward a break — even as indexes hit record highs.
What happened
Speaking at the Forbes Global CEO Conference in Singapore on Wednesday, Bridgewater Associates founder Ray Dalio said a large amount of debt was being raised to fund AI investment and that higher interest rates could eventually cause the bubble to burst. “We are in the part of the cycle that is before that but approaching that,” Dalio said. “I think we are close to that.”
The context makes the warning pointed: tech companies have been spending hundreds of billions of dollars on AI infrastructure, with a growing share financed through debt. Stock gains have concentrated in a small number of large tech companies. Rising global bond yields are pushing up the cost of financing the data centers and chips the buildout needs.
Meanwhile the S&P 500 and Nasdaq 100 hit record highs this week on optimism over technology earnings — a setup Dalio has compared to past speculative peaks.
The difference between technology and investment
Dalio’s core distinction, made in his remarks: there is a difference between “how terrific a technology is and how terrific an investment is.” Nobody can afford to underinvest in AI given its potential, so everyone overinvests — and that dynamic creates a bubble.
Other triggers he flagged: wealth taxes and the need for investors to convert paper gains into cash. “Everybody says ‘I’m worth a billion dollars’ but OK, try to spend that,” he said — the process of selling assets to realize wealth puts pressure on bubbles and can cause them to burst.
He wasn’t the only skeptical voice in Singapore: Temasek chief investment officer Rohit Sipahimalani said at a Milken Institute event that if the AI narrative unwinds over safety issues, regulation, or weak end-user ROI going into 2027, “there could be issues.”
Why it matters
The “everything AI, tested” take: Dalio has made this argument before — he said AI showed “classic signs” of a bubble back in August — but the timing matters. This warning landed the same week as a $1.8 billion government-and-big-tech bet on AI biology data, $12 billion reportedly being raised by DeepSeek, and a $60 billion debt raise to buy AI chips. The money is real; Dalio’s question is whether the financing structure can survive higher rates. For anyone riding AI stocks, his framing is worth pocketing: the technology can win while the investment loses. The internet survived the dot-com bust — but a lot of dot-com investors didn’t.
Frequently asked questions
Why does Ray Dalio think AI is a bubble?
He points to heavy debt financing of AI infrastructure spending, rising interest rates raising borrowing costs, and market gains concentrated in a handful of tech stocks — classic late-cycle bubble signals.
Is he saying AI is bad technology?
No. He distinguishes between the technology, which he calls terrific, and the investment — arguing that fear of underinvesting leads everyone to overinvest, which creates the bubble.
What would cause the bubble to burst, in his view?
Rising interest rates biting into debt-financed AI spending, plus forced selling as investors convert paper wealth into cash or face wealth taxes.
Sources: Reuters, IANS