AI 'bubble' echoes dotcom excesses, warns billionaire investor Ray Dalio
Jan 28, 2025 - financialpost.com
Billionaire investor Ray Dalio has warned of a potential "bubble" in U.S. artificial intelligence (AI) stocks, drawing parallels to the dotcom bust of the late 1990s. He noted that while AI is a transformative technology, current stock valuations are high, compounded by interest rate risks, which could lead to a market correction. Dalio emphasized that the tech war between the U.S. and China over AI is crucial not just for economic but also military superiority, suggesting that state support for AI development is inevitable despite potential profitability concerns.
The article also highlights recent developments in the AI sector, including a significant market impact from Chinese AI company DeepSeek, which claims its model rivals those of OpenAI and Meta. This has raised questions about the returns on investments by Silicon Valley companies in AI infrastructure. Meanwhile, U.S. President Donald Trump has pledged support for American AI, and China has launched funds to bolster its semiconductor industry, underscoring the geopolitical stakes in AI advancement.
Key takeaways:
Ray Dalio warns of an AI investment bubble in the U.S., likening it to the dotcom bust.
Concerns rise over high stock valuations and interest rate risks potentially pricking the bubble.
DeepSeek's AI advancements challenge U.S. tech dominance, impacting market valuations.
State support for AI development is seen as crucial in the global tech race, despite profitability concerns.
