Ray Dalio Says AI Bubble Is ‘Close’ to Bursting as Debt and Rising Rates Raise Red Flags

Key Points:

• Billionaire investor Ray Dalio warned at the Forbes Global CEO Conference that surging AI-related borrowing, rising interest rates, and efforts to convert paper wealth into cash are pushing markets closer to an AI bubble burst, comparing the current boom to the late 1920s.
• AI spending is rapidly increasing, with JPMorgan Chase estimating hyperscaler ecosystem spending could rise from $700 billion in 2026 to $1 trillion in 2027, while major tech companies have issued nearly $200 billion in investment-grade debt in the first half of 2026, nearly double that of 2025.
• Dalio highlighted that wealth taxes and attempts to cash out unrealized gains may trigger the bubble's collapse, emphasizing the difficulty of converting paper wealth into actual spendable money.
• The market concentration is notable, with Nvidia, Apple, and Microsoft accounting for over 21% of the S&P 500, and concerns about market denial stages similar to past crashes have been raised by investors like Michael Burry.
• The article also discusses diversification strategies beyond stocks and bonds, highlighting platforms that provide access to real estate, fixed income, and other asset classes to build resilient portfolios amid shifting economic cycles.