Investor exuberance over artificial intelligence has fuelled a “bubble” in US stocks that resembles the build-up to the dotcom bust at the turn of the millennium, billionaire investor Ray Dalio has warned.
Dalio told the Financial Times that “pricing has got to levels which are high at the same time as there’s an interest rate risk, and that combination could prick the bubble”.
The warning from Dalio, the founder of hedge fund Bridgewater Associates and one of the highest-profile figures on Wall Street, comes as concerns swirl over whether the boom in US AI stocks has gone too far. Investors also remain concerned about elevated borrowing costs, worries that sharpened after Federal Reserve officials in December trimmed their expectations for rate cuts this year.