Billionaire Ray Dalio warns AI bubble may be close to bursting

Billionaire investor Ray Dalio warned that artificial intelligence is forming a “classic bubble” that could be approaching a breaking point as companies take on increasing amounts of debt to finance massive investments in the technology.

Speaking at the Forbes Global CEO Conference in Singapore, Dalio said the growing debt used to fund AI investments could become a major risk, particularly as higher interest rates increase financing costs.

“I think we’re close,” Dalio said, while noting that the market has not yet reached the point of a break.

His comments come as major technology companies are committing hundreds of billions of dollars to artificial intelligence, increasingly relying on debt to finance the infrastructure needed to develop and operate the technology.

At the same time, bond yields have risen to levels not seen in decades, increasing the cost of financing the data centers and other infrastructure required for the expansion of AI.