Ray Dalio warns AI bubble is nearing a breaking point as debt and rates rise Proactive Wed, October 7, 2026 at 9:30 AM EDT 2 min read AMZN -0.58% MSFT -0.53% ORCL -1.40% GOOG -0.94% META -2.22% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Ray Dalio, the billionaire investor, has warned that the artificial intelligence (AI) boom has the characteristics of a classic bubble and may be nearing a point of collapse.
Dalio said at the Forbes Global CEO Conference in Singapore on Wednesday that rising interest rates and the growing amount of debt used to finance AI investment could trigger a sharp reversal.
"There's a lot of pressure" for interest rates to rise further, Dalio said, adding that the AI market was approaching the stage when higher borrowing costs could begin to puncture the bubble.
His warning comes as technology companies borrow heavily to finance data centers, computing capacity and other infrastructure required to develop and deploy AI systems.
The scale of that borrowing has grown as major technology companies turn increasingly to bond markets, with Amazon, Microsoft, Alphabet, Meta Platforms and Oracle issuing about $200 billion of investment-grade debt during the first six months of 2026.
Global AI-linked debt issuance is expected to approach $570 billion this year, more than twice last year's level, while hyperscalers are directing an unusually large share of operating cash flow toward capital spending.
The founder of Bridgewater Associates, one of the world's largest hedge funds, said the distinction between a powerful technology and a good investment was important, arguing that the success of AI itself does not guarantee that current valuations will hold.
His comments come as the S&P 500 and Nasdaq 100 reach record levels, driven partly by enthusiasm for AI companies despite rising borrowing costs and concerns about market concentration.
Dalio also identified pressure to convert paper wealth into cash as another potential trigger for a market reversal, alongside higher interest rates and mounting debt.
