Ray Dalio sees the ‘classic signs’ of a bubble with AI, says the stock market looks like the run-up to 1929 or 2000

Moneywise and Yahoo Finance LLC could earn revenue through links in the content provided. Ray Dalio, founder of Bridgewater Associates, recently expressed concerns over an AI bubble during a podcast appearance. He believes market enthusiasm for AI has led to a bubble similar to those seen in 1929 and 2000. According to Dalio, this surge in AI-related companies, like SpaceX and OpenAI, is a clear warning sign.

The checklist known as the "Four Horsemen of the Bubble Apocalypse" includes overvaluation, speculative beliefs, equity issuance, and inflows. Inflows, specifically retail investors entering the stock market, have increased by 47% year-over-year. Dalio emphasized the difference between wealth and money, noting that many people are getting wealthy but cannot spend their wealth directly.

He suggested that a bubble's burst could lead to a decrease in money supply, causing asset prices to drop and affecting spending.