Ray Dalio warns AI hype could spark a market bubble like 1929 and 2000

In a recent interview, Ray Dalio warned that the current excitement around artificial intelligence is pushing equity markets into bubble territory reminiscent of the 1929 crash and the 2000 dot-com bust. He pointed to the unprecedented scale of recent IPOs, including SpaceX’s public debut and the trillion-dollar aspirations of Anthropic and OpenAI, as evidence of a surge in stock issuance that fuels speculative valuations.

Dalio echoed Jeremy Grantham’s view that AI has merely postponed, not resolved, underlying overvaluation. He explained that paper wealth cannot be spent without converting it to cash, exposing investors to severe losses if market sentiment reverses. The billionaire also noted that rising interest rates and a flood of new market participants heighten the risk. Finally, Dalio cautioned that a bubble burst could trigger broader political and geopolitical instability beyond mere portfolio losses.