Bridgewater’s Ray Dalio warns the AI bubble is approaching levels seen in 2000: Wealth is not equivalent to money, and the surge in initial public offerings (IPOs) is the key force that will burst the bubble.

Bridgewater Associates founder Ray Dalio delivered his sternest market warning on the "CEO Diary" podcast, bluntly stating that the AI frenzy has pushed markets into bubble territory similar to the 1929 and 2000 bubbles. When the host referenced Jeremy Grantham’s earlier claim that the current period is "the biggest investment bubble in U.S. history," Dalio responded directly: "He’s right." Dalio outlined the core contradiction of bubble dynamics with a simple scenario: Investors buy AI company shares for $100, then borrow against them as collateral. When the market reverses and everyone needs cash simultaneously, prices could crash to $25, while the loans remain due. "Wealth is not money," Dalio emphasized. "You see many people getting rich, but wealth can’t be spent—you have to sell it to get cash. Many inexperienced investors flooding into leveraged ETFs in today’s market are essentially gambling." Dalio noted two typical bubble-popping forces: rising interest rates increasing debt financing costs, and a surge in stock issuance. The latter is already a reality: SpaceX went public in June but trades below its issue price; S&P projects its free cash flow will stay negative through 2029. Anthropic has secretly filed for an IPO, set to debut as early as October with a nearly $1 trillion valuation. OpenAI has also filed an application, targeting over $1 trillion. Dalio’s more urgent warning is not about the market itself, but the political and geopolitical conflicts that could follow a bubble burst. The U.K. changing six prime ministers in seven years is a symptom of government funding drying up and voters clashing over how to raise money, he said. An AI bubble burst could trigger political turmoil at the end of an 80-year cycle. Wall Street firms including Goldman Sachs and Apollo have recently issued similar signals, pointing to an earnings bubble in tech stocks and the breakdown of the 60/40 investment portfolio strategy that worked for 40 years.