As the artificial intelligence wave sweeps through Wall Street, the market's enthusiasm for chip giants has pushed US stocks to historical highs.

Written by: Jinshi Data

Amid the capital frenzy driven by artificial intelligence, Ray Dalio, the founder of Bridgewater Associates, has issued a warning about market risks, believing that the current situation exhibits typical bubble characteristics and expects this phase will eventually come to an end.

In an interview with Bloomberg Television on Wednesday, Dalio pointed out that technological waves are often accompanied by excessive capital influx. "All great technological changes will breed bubbles," he said, while emphasizing that it is difficult for investors to accurately grasp the scale of their investments; companies either invest heavily at any cost to seize market share or risk losing competitive positioning due to insufficient investment.

This judgment comes against the backdrop of a significant rise in AI-related assets. Driven by demand for data center construction, particularly the surge in demand for high-bandwidth chips, chip companies have become the core targets of Wall Street capital pursuit, contributing to continuous new highs in the overall market. Accompanying this round of increases, there is intense internal discussion about whether valuations have already become overheated.

NVIDIA CEO Jensen Huang has recently expressed a different stance. In remarks this week, he stated that investors willing to invest in the AI wave will see "crazy" returns.

In remarks made the day before, he responded to valuation concerns, pointing out that those worried about the huge investments into data centers not delivering returns were asking: "Remember last year when we were gathered, the discussions and narratives around this investment were asking: What is the return on investment (ROI)?" He then retorted, "Now, give me an example of which crazy person is still saying those things. They will sound like they've gone mad."

In contrast, Dalio is more focused on the risks during the profit realization phase. He believes that once the market enters a phase where investments need to be converted into actual profits, bubbles often show signs of bursting. "The process of popping a bubble is actually the process of converting paper wealth into cash," he stated, expressing concerns about the future profitability of some AI companies. Although he acknowledges that AI itself has significant value, he also candidly stated that the current market trend "is repeating such a cycle."

Dalio, 76, is the founder of Bridgewater Associates, one of the largest hedge funds in the world. He is set to complete a full exit from the company by 2025, including selling all remaining shares and stepping down from the board. According to the Bloomberg Billionaires Index, his personal net worth is approximately $21.5 billion.