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

Meanwhile, financial experts such as Grantham, Michael Burry and Torsten Sløk have all spoken about their AI bubble beliefs, sharing Dalio’s concerns. There’s also a general consensus to consider: according to the Globe and Mail, the Bank of America’s Global recent fund managers survey found that managers believe an AI bubble is “the most pressing tail risk facing the market right now.”

While speaking with Bartlett on the podcast, Dalio mentioned surging stock issuances as one of two primary factors that — along with rising interest rates — can “prick” a bubble. And this particular horseman is already in the books after SpaceX went public with a massive evaluation and has traded below its IPO price ever since.

Meanwhile, Anthropic’s upcoming IPO is targeting a near-trillion-dollar valuation, while some analysts believe OpenAI’s IPO could set the company’s valuation at more than a trillion dollars.

The fourth horseman, inflows, also appears to have come to fruition. In 2025, retail investors — non-professional individuals who buy or sell stocks, bonds or funds — accounted for $5.4 trillion of trading activity, according to independent data firm Vanda. That’s close to a 47% increase from 2024, Forbes reports.

Read More: Vanguard reveals what’s coming for U.S. stocks — and it could be bad news for this group of investors

Dalio sees the ‘classic signs’ of a bubble

During the podcast, Bartlett walked Dalio through a hypothetical situation that explains how an AI bubble might pop, as well as the difference between wealth and money.

Let’s say an investor buys one stock in an AI company that’s valued at $100, giving the investor a net worth of $100. That investor then goes to the bank and takes out a $50 loan. Then the market takes a turn for the worse and other investors who bought the same stock start to sell, driving a single share down to $25 — while our investor’s $50 loan still needs to be repaid.

“But now this thing that I have that was worth $100 a couple of months ago is now worth $25 and I’m $25 in a hole,” Bartlett explained. “So I have to quickly sell. And then with everybody selling all the prices of assets dropped. People stop spending money at the restaurants. Like you [Dalio] say, there’s less money around and then the bubble has burst and we’re in this sort of declining [trajectory].”

Dalio’s quick response? “You got it!”

“What’s quite common now is you can issue stock for, let’s say you raise $50 million and you value the company at a billion dollars. Only $50 million was actually spent on that company, but now if you raise that, you’re a billionaire,” he added.

“Because [of] the accounting value of that, what do you own? You own stock that is valued at a billion dollars. Nobody paid a billion dollars or whatever it is, right? And now you own that stock, but that stock … you can’t spend because you can’t spend wealth.”

This led Dalio to mention an important distinction between money and wealth.

“Wealth is not the same as money,” he said. “You see a lot of people getting wealthy but you can’t spend the wealth. You have to sell the wealth to get money because you can only spend money.”

Asked again whether he is seeing the signs of a potential bubble, Dalio doubled down.

“Yeah, the classic signs.”

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This article originally appeared on Moneywise.com under the title: Ray Dalio sees the ‘classic signs’ of a bubble with AI, says the stock market looks like the run-up to 1929 or 2000

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