'AI will change the world,' but could also create a devastating bubble: Ray Dalio

Ray Dalio warns that while AI may drive productivity breakthroughs, it could also create an investment bubble. Both outcomes can happen simultaneously, leading to significant wealth disparities. 

Artificial intelligence could create productivity breakthroughs in history and, at the same time, fuel a damaging investment bubble, according to Ray Dalio, a billionaire investor and the founder of Bridgewater Associates.

Speaking in a video published by the World Economic Forum (WEF), Dalio said the debate over whether AI will transform the economy or pose serious risks overlooks that both outcomes could occur simultaneously.

Dalio argued that transformative technologies typically attract substantial investment because businesses and investors expect them to change the world. That enthusiasm can then lead to overinvestment, rising debt and eventually a bubble-and-bust cycle.

“There’s a process in which great new technologies are something that everybody wants to invest in because they’re going to change the world, and then they over-invest in them, and they create debt, and they go through a certain dynamic, in a sense, that creates a bubble, that creates a bust,” Dalio said in a new video for the World Economic Forum.

“So simultaneously it is going to be one of the biggest productivity-enhancing, changing-the-world forces, and also a bubble that is going to have devastating effects on many people as it works itself through this.”

Taking the dotcom era as an example, he noted that Nasdaq surged 86% in 1999 before falling 77% from its peak by October 2002. Yet the internet itself went on to fundamentally change the economy.

The WEF has separately pointed out that both the productivity potential and distributional risks of AI. Its September 2026 chief economists’ outlook found that 69% expected AI to deliver meaningful productivity gains, while 61% did not expect data-centre investment to generate significant numbers of jobs globally.

hancing [technologies].”

Sanchari Ghosh