Billionaire Ray Dalio Warns AI Bubble Could Soon Burst

0:00This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed Sponsored Jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed Sponsored Jobs. Get a$75 sponsored job credit at indeed.com slash podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed Sponsored Jobs. Hedge fund billionaire Ray Dalio said the artificial intelligence bubble is nearing the point where it may burst as interest rates rise and technology companies borrow heavily to fund the AI infrastructure build-out.

0:42At Wednesday's Forbes Global CEO conference in Singapore, Dalio warned that while the AI bubble has not yet popped, we are rapidly approaching that stage of the cycle. Dalio said climbing interest rates and the heightened debt companies are taking out to fund AI could push the classic bubble to its breaking point. He also warned that other factors like a wealth tax and attempts to convert paper profits into tax could pop the bubble, arguing that, quote, everybody says I'm worth a billion dollars, but OK, try to spend that. He added, quote, in order to spend that, you have to sell wealth in order to get money.

1:22and so the bubble usually pricks at that. His comments come as global bond yields hit their highest point in decades, with the U.S. 10-year treasury yield reaching its highest level since 2002, hiking borrowing costs. Dalio's warnings regarding an AI bubble are not new. Previously in June, he pointed out signs of an impending market collapse. He noted that, quote, all great technology changes produce bubbles, leading participants to either overspend heavily to secure market share or underspend and get left behind. Tech companies' massive spending on AI infrastructure has been increasingly raising investor concerns as many fear the revenue won't justify the massive investment, though optimism surrounding key tech companies has pushed the S &P 500 and NASDAQ 100 up.

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2:44We'll see you next time.