Bridgewater Associates founder Ray Dalio has warned that the artificial intelligence-driven rally in technology stocks is entering the early stages of a bubble, cautioning investors after a third consecutive year of strong gains for US equities, according to a report by the Globe and Mail.
In a post on social media platform X, Dalio said the surge in AI-linked stocks had pushed Wall Street’s main indices to record highs in 2025, but argued that US assets underperformed alternatives such as non-US equities and gold over the year.
According to Dalio, gold gained more than 60% in 2025, while emerging markets posted a strong year and the UK’s FTSE 100 outperformed many major global benchmarks. He added that investors would have been better positioned in non-US stocks and bonds, as well as outside US cash markets.
Market volatility picked up in the second half of the year as concerns grew that lofty valuations in AI-related stocks could trigger a broader sell-off. Investor sentiment was further pressured by geopolitical tensions in the Middle East and uncertainty over the US Federal Reserve’s interest rate trajectory.
Dalio also highlighted the potential impact of monetary policy, suggesting that the newly appointed Fed chair and the Federal Open Market Committee may lean towards lower nominal and real interest rates. While supportive for asset prices in the near term, such a stance could exacerbate asset bubbles, he warned.
Analysts say that as concerns over stretched valuations increase, global investors — including hedge funds — are likely to seek opportunities in undervalued regions and asset classes rather than crowded US technology trades.
