Bridgewater Associates founder Ray Dalio warned Tuesday that a bubble may be forming in U.S. megacap technology stocks amid the ongoing artificial intelligence boom, but suggested it could persist as long as the Federal Reserve maintains its easy monetary stance.
“There’s a lot of bubble stuff going on,” Dalio told CNBC’s Sara Eisen at the Future Investment Institute. “But bubbles don’t pop, really, until they are popped by tightness of monetary policy and so on.”
The hedge fund veteran noted that his personal “bubble indicator” is currently elevated. He added that the Federal Reserve is more likely to ease rates than tighten them, even as the central bank prepares for its second rate cut of the year on Wednesday, with another expected in December.
Dalio highlighted that outside AI-linked stocks, the broader market has performed “relatively poorly,” creating a “concentrated environment.” He observed that 80% of market gains are concentrated in Big Tech, fueled by optimism over AI developments and upcoming earnings announcements.
The billionaire investor’s cautionary remarks echo concerns voiced by other prominent market participants who have flagged the potential for inflated valuations in AI-driven technology companies, underscoring the delicate balance between innovation-led growth and market overheating.
