Ray Dalio warns of AI market bubble; suggests diversification
Ray Dalio, founder of Bridgewater Associates, thinks we're getting close to a historic market bubble—thanks mostly to all the hype around AI stocks.
Dalio told CNBC that, according to his indicators, the US market is "about 80% of the way" to historic bubble peaks like those in 1929 and 1999.
Still, he's not saying to panic—just diversify your investments instead of making any sudden moves.
Why is Dalio worried?
US stock indexes have been on a three-year winning streak, mostly because AI companies keep smashing records.
But Dalio points out some red flags: the AI sector is overheating, the US has a $1.8 trillion deficit hanging over it, and there are lots of risky bets in play.
His own AI bot predicts there's a 65-75% chance we'll see an AI stock correction by the end of 2026—especially for big names like Apple and NVIDIA.
What else is happening in the market?
Even with these warnings, Dalio's Bridgewater funds set new records in 2025.
Meanwhile, gold prices jumped over 60% last year, and markets outside the US—including emerging markets and London's FTSE 100—actually outperformed American stocks last year.