Billionaire Warns of AI Economic Bubble: Signs of Major Crises Reappearing

Billionaire investor Ray Dalio, founder of Bridgewater Associates, says the artificial intelligence boom is showing some of the classic signs of a financial bubble, even though the technology itself could bring revolutionary change.

He made the comments in a 90-minute interview with Steven Bartlett on “The Diary of a CEO” podcast.

Dalio, known for his analyses ahead of the 2008 financial crisis, argues that revolutionary technologies can be simultaneously transformative and the object of speculation. According to him, great enthusiasm can lead to strong growth in prices and investment, before markets face a correction.

In the case of AI, Dalio does not argue that the technology will fail. On the contrary, he considers it revolutionary and predicts it will affect almost every field, including the way people work, think, and solve problems. His warning relates mainly to the financing and the expectations created around the industry.

A significant part of the interview is devoted to AI’s impact on the labor market. Dalio discusses the possibility that automation may replace some functions currently performed by people and raises the question of whether the economy will create enough new jobs to compensate for those that may be lost.

Dalio places AI’s development within his broader “Big Cycle” theory. According to this theory, periods of major change are linked to the combination of high debt, internal political and social tensions, shifting balances between world powers, and technological development. This is Dalio’s analytical framework, not a firm prediction that a crisis will occur at a given moment.

Dalio’s key message is that two things can be true at the same time: AI can be a technological revolution, while the investment around it can form a financial bubble.

He does not give a date for a market crash, and the interview stresses that the discussion should not be interpreted as investment advice.