Why Ray Dalio is Worried About an AI Bubble

Since the AI boom began, industry skeptics have warned it would be the next bubble. They point to massive investments, circular financing, and the technology’s reliability issues. And yet, as revenue rises and the models improve, it might appear that a crash is no longer likely. Ray Dalio says that isn’t the case.

As the founder of Bridgewater Associates, the world’s largest hedge fund, Dalio knows a thing or two about markets. He famously warned of the 2008 crisis, enabling his firm to post gains while most funds lost money. In the AI market, Dalio still sees a potential calamity. The technology is amazing, he says, but that doesn’t necessarily mean it’s an amazing investment.

Is he right? And can a catastrophe be averted? In conversation with Nicholas Thompson, CEO of The Atlantic, Dalio describes the five forces that shape history, explains why the AI boom has survived tariffs and the Iran War, and shares the advice he gives young people who are entering the workforce.

Produced independently of The Atlantic’s editorial staff.

(00:00) Introduction

(02:20) How macroeconomic forces, debt cycles, and emerging technology can drive bubbles

(07:15) The rules-based system Ray used to run Bridgewater

(12:54) Assessing the current tech bubble

(16:15) How bubbles pop

(23:00) Why the bubble hasn’t popped yet

(30:58) Why there might be a crash even if AI ushers in unprecedented productivity

(37:49) Solutions to the government’s debt crisis