Ray Dalio, founder of Bridgewater Associates, warns that the bubble in the artificial intelligence sector is close to bursting. In an interview with Bloomberg Television on October 6, 2026, he stated that the AI market is showing "classic signs" of a bubble nearing its bursting point. His argument is not that the technology is overvalued, but that money behind it is becoming more expensive, and some of the largest players now need cash. Dalio likened the AI boom to two well-known examples: the 1929 crash and the dot-com bubble of 2000.
At the center of his argument are hyperscalers – a term used in the industry to refer to giant companies investing capital in AI infrastructure on a large scale. According to Dalio, these companies are increasingly turning to debt financing instead of raising equity capital. He linked this shift to the rising cost of borrowing and growing cash needs.
Dalio identified three specific signals that, in his opinion, manifest when a bubble begins to deflate. The first is forced sales for cash: when investors or companies are compelled to liquidate assets to cover obligations, prices fall due to necessity rather than a change in sentiment. The second is a sharp increase in the supply of new shares: mass issuances flood the market with securities, dilute the stakes of existing holders, and absorb the demand that had driven prices up. The third is rising retail leverage: when ordinary investors borrow more to invest in a trend, any downturn is exacerbated by margin calls.
This material is prepared solely for informational purposes and does not constitute financial advice or a recommendation.
Related articles
