Ray Dalio Warns 'We Are Now in a Bubble': Here's Why the Billionaire Investor Says AI Boom Mirrors 1920s Crash

Billionaire investor Ray Dalio said Wednesday that the current artificial intelligence boom follows the same historical pattern as past technology bubbles, arguing that "we are now in a bubble" while cautioning that the underlying innovation remains genuinely transformative.

'The Miracle' Versus 'The Investment'

The Bridgewater Associates founder said in a post on X that nearly every technology boom produces a bubble and a bust, citing the railroads and the Industrial Revolution as prior examples.

He pointed to the late 1920s, when electricity, refrigeration, telephones, radio, airplanes, and cars all emerged around the same time, saying that kind of moment naturally draws investors in.

The danger, Dalio said, is that people fail to distinguish the miracle from the investment tied to it.

A technology can be genuinely transformative, he explained, but if the stocks tied to it are priced too high or purchased with borrowed money, the result is a crash, the same mechanic he said produced the 1929-1933 bust./p> figure class="wp-block-embed is-type-rich is-provider-x wp-block-embed-x">div class="wp-block-embed__wrapper">

Almost every technology boom creates a bubble, then a bust, whether it’s railroads, the Industrial Revolution, or the late 1920s.br>br>Think about the late '20s: electricity, refrigeration, telephones, radios, airplanes, and cars were all emerging at once. Naturally, people wanted to… pic.twitter.com/S9lCzI9pjC/p>— Ray Dalio (@RayDalio) September 9, 2026/blockquote> /div>

The Same Dynamics Are Playing Out With AI

Dalio said those same dynamics apply to AI today, adding that "we are now in a bubble."

He noted that while the technology will likely prove valuable, investors must still evaluate who truly benefits, whether it generates real returns, and whether current stock prices reflect excessive optimism.

He said that while the technology will likely prove valuable, investors must still judge who truly benefits, if it generates real returns, and whether current valuations are overly optimistic./p> div class="bz-read-next-block" data-variant="card" data-news-mode="manual" >

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Hyperscaler Capex

That warning comes as tech giants like Amazon.com, Inc. (NASDAQ:AMZN)/a>, Microsoft Corp. (NASDAQ:MSFT)/a>, Alphabet Inc. (NASDAQ:GOOG)/a> (NASDAQ:GOOGL)/a>, and Meta Platforms Inc. (NASDAQ:META)/a> double down on infrastructure.

U.S. hyperscalers are on pace to spend roughly $916 billion on capital expenditures over the next 12 months, a figure Apollo Global Management's Torsten Slok said puts data-center capex on track to reach 3.1% of U.S. GDP by 2027, nearly three times the peak share telecom investment reached during the dot-com buildout.

AI bellwether Nvidia Corp. (NASDAQ:NVDA)/a> is further fueling that buildout by acting as a "buyer of last resort" and partnering with Wall Street to help finance customers' data centers.

Price Action: Nvidia, whose shares have climbed 18.44% so far this year and gained 26.13% over the past year, closed 0.91% lower at $223.67 on Wednesday.

According to Benzinga edge rankings, Nvidia's stock has a Momentum score in the 80th percentile and a Growth score in the 98th percentile./p> figure class="wp-block-image size-large">/figure> div class="bz-see-more-ranking-block" data-ranking="growth" data-theme="light" data-variant="basic" >

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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