Ray Dalio Warns of Potential AI Bubble Burst Due to Rising Interest Rates

Billionaire investor Ray Dalio cautioned that the artificial intelligence sector may be approaching a bubble that could burst, citing rising interest rates and the pressure to convert wealth into cash. Dalio made these remarks during the Forbes Global CEO Conference in Singapore on October 7, 2026. He noted that significant amounts of debt are being incurred to finance AI initiatives, and as interest rates continue to rise, this could lead to the bubble's collapse. "We're in the part of the cycle that is before that but approaching that," Dalio stated. His comments come amid substantial investments in AI by technology companies, which are increasingly financed through debt. Global bond yields have reached their highest levels in decades, raising the cost of funding necessary for AI infrastructure development. Despite this, equity valuations remain high, driven by optimism surrounding technology earnings, contributing to record highs in the S&P 500 and Nasdaq 100 indexes. Dalio also pointed out that factors such as wealth taxes and efforts to convert unrealized gains into cash could further trigger the bubble's collapse. He remarked, "Everybody says 'I'm worth a billion dollars' but OK, try to spend that. In order to spend that you have to sell wealth in order to get money — and so the bubble usually pricks at that."