AI boom is in early bubble phase, Bridgewater founder Ray Dalio says

Jan 5 (Reuters) - The artificial quality roar that powered Wall Street's exertion stocks is "now successful the aboriginal stages of a bubble," hedge ​fund manager Ray Dalio warned successful a station connected societal media ‌platform X connected Monday.

Wall Street's main indexes posted double-digit gains successful 2025, marking a 3rd consecutive ‌year of advances, a tally past seen during 2019–2021. The gains were fueled by dense capitalist request for AI-linked stocks, which pushed U.S. equity benchmarks to grounds highs.

Dalio, who co-founded hedge money Bridgewater Associates successful 1975, said U.S. stocks importantly ⁠underperformed non-U.S. equities and golden ‌in 2025. Gold surged much than 60% past year, portion emerging markets posted a banner twelvemonth and Britain's blue-chip FTSE ‍100 outperformed large planetary markets.

"Clearly, investors would person overmuch alternatively been successful non-U.S. stocks than successful U.S. stocks, conscionable arsenic they would person preferred to beryllium successful non-U.S. bonds ​than successful U.S. bonds and U.S. cash," helium wrote successful the post.

Global ‌stocks seesawed successful the autumn arsenic mounting interest implicit a imaginable AI banal bubble dragged connected sentiment and raised the hazard of a selloff.

Meanwhile, geopolitical tensions successful the Middle East and uncertainty implicit the U.S. Federal Reserve's involvement complaint way added to capitalist unease.

"Of course, determination are large questions astir Fed argumentation ⁠and productivity maturation ahead," Dalio said.

"It appears ​most apt that the recently appointed Fed seat ​and the FOMC (Federal Open Market Committee) volition beryllium biased to propulsion nominal and existent involvement rates down, which would beryllium supportive ‍to prices and inflate ⁠bubbles."

Analysts accidental planetary investors volition actively question opportunities this twelvemonth successful undervalued pockets of fiscal markets arsenic increasing concerns implicit an AI bubble ⁠push traders to look beyond highly valued exertion stocks.

Bridgewater Associates' main macro funds delivered a record-breaking ‌performance successful 2025, Reuters reported successful precocious December.

(Reporting by Manya ‌Saini successful Bengaluru; Editing by Anil D'Silva)