Ray Dalio, the billionaire founding father of Bridgewater Associates, delivered one in every of his starkest warnings but on the present market atmosphere throughout a wide-ranging look on The Diary of a CEO with host Steven Bartlett, arguing AI enthusiasm has pushed markets into bubble territory paying homage to 1929 and 2000. His warning arrives simply as the market prepares to check his thesis in actual time: SpaceX has already gone public in the largest IPO ever and Anthropic and OpenAI are barreling towards trillion-dollar valuations—exactly the form of speculative issuance surge that market historians deal with as a bubble’s clearest warning signal.
Bartlett opened by referencing a prior guest, Jeremy Grantham, who told the show that markets are staring down “the biggest investment bubble in American history.” Dalio’s response was direct: “He’s right,” he said.
That call is consistent with Grantham’s long track record—the GMO co-founder called the Japanese asset bubble before it collapsed in the early 1990s, the dot-com bubble before it burst, and wrote in Fortune in September 2007 that U.S. housing was in “genuine bubble territory” months earlier than the Great Financial Crisis, at a time when even the Federal Reserve was dismissing bubble discuss.
When Grantham talked to Fortune in April about his memoir, The Making of a Permabear, Grantham laid out the framework underpinning his present AI name: a “bubble within a bubble.” The unique super-bubble was already inflating dangerously by means of 2021, he informed Fortune, and it even cracked — with the S&P 500 falling roughly 25% from January by means of October 2022 — earlier than ChatGPT’s arrival reversed the decline. “The day after Chat came out, the Mag Seven lifted the market on its broad shoulders and staggered forward,” he mentioned, arguing that AI didn’t repair the underlying overvaluation however “deferred it while making it larger.”
Grantham’s January 2026 paper with monetary historian (and memoir co-author) Edward Chancellor discovered the market’s value/e book ratio and cyclically adjusted earnings multiples at extremes surpassed solely in 1929, 1972, 1999-2000, and 2021—every adopted by a devastating correction.
The Four Horsemen are assembling
Acadian Asset Management’s Owen Lamont has framed the clearest take a look at of whether or not markets are actually in bubble territory round 4 circumstances he calls the “Four Horsemen of the Bubble Apocalypse“: extreme overvaluation, widespread “bubble beliefs” (buyers who admit costs are too excessive however anticipate them to rise anyway), a surge in fairness issuance, and a flood of latest market contributors.
Dalio’s feedback map virtually exactly onto the third horseman. “There’s almost nothing that’s easier to produce than stock,” he mentioned, describing how an organization can increase $50 million, get valued at a billion, and mint a paper billionaire with out a billion {dollars} ever altering arms. He’s recognized surging inventory issuance as one in every of the two main forces that “prick” a bubble, alongside rising rates of interest.
That issuance horseman is not theoretical—it’s on the calendar. SpaceX went public in June, however has since traded beneath its IPO value, with S&P projecting destructive free money stream by means of 2029 and Moody’s flagging Elon Musk’s concentrated voting energy as a governance danger. Anthropic has confidentially filed for an inventory anticipated as early as October, focusing on near $1 trillion, whereas OpenAI has filed individually and is focusing on a debut some analysts peg above $1 trillion, although the timeline has already slipped from late 2026 towards 2027 amid “shifting market dynamics”.
Dalio walked by means of the mechanics utilizing a easy thought experiment: purchase a unit of an AI firm for $100, borrow in opposition to that paper wealth, and when the market turns and everybody wants money concurrently, the value can collapse to $25 whereas the mortgage nonetheless wants repaying. His core distinction is between wealth and cash: “Wealth is not the same as money,” he mentioned. “You see a lot of people getting wealthy but you can’t spend the wealth. You have to sell the wealth to get money because you can only spend money.”
Asked whether he’s seeing signs of a bubble, Dalio didn’t hedge: “Yeah. Yeah. Yeah. Classic signs that we’re in [one].” He stressed a bubble is “a degree thing” rather than binary, pointing to weak-handed, unsophisticated investors piling into leveraged bets, including leveraged ETFs tracking the stock market. “It’s more like they’re crapshooting,” he said.
Grantham’s diagnosis of why bubbles form in the first place complements this: markets are “constitutionally incapable of looking further than the present moment,” he told Fortune, extrapolating current conditions and “double-counting prosperity” until the excitement itself becomes the risk.
Wall Street’s own numbers are starting to agree
These warnings, proliferating since 2025, are increasingly being echoed by an unlikely source: Wall Street’s own bullish research shops. Goldman Sachs, one in every of the Street’s most persistently bullish analysis outlets, argued on August 3 that with “there does not appear to be a valuation bubble … there may be an earnings bubble” in know-how, in the phrases of chief world fairness strategist Peter Oppenheimer.
The same day, Apollo’s Torsten Slok declared “the 60/40 portfolio is broken,” arguing that neither shares nor bonds have been responding in the approach that a long time of market historical past would predict, upending 40 years of funding technique.
BCA Research’s Peter Berezin has been arguing for months that the AI commerce is “primarily an earnings bubble rather than a valuation bubble”—the sort that has traditionally clustered in boom-bust industries like pre-2008 banks. The sample repeated the week of July 26-31: Microsoft and Amazon rose 18% and 10% on robust capex credibility, whereas Alphabet fell 4% and Meta almost 10%, regardless of all posting robust earnings — an indication buyers are not rewarding spending merely for present and the bubble stage is nearing some form of reckoning, as Dalio has predicted.
The “Big Cycle” behind it
Dalio located this second inside what he calls the “Big Cycle”—a roughly 80-year sample combining debt dynamics, rising wealth gaps, home political battle, and shifting geopolitical energy. He warned that when a bubble bursts, “you have people at each other’s throats,” citing the UK’s six prime ministers in seven years as a symptom of governments missing cash and voters turning on one another over learn how to increase it. Grantham’s personal framing reaches for a fair longer horizon, tying market extra to demographic collapse and useful resource shortage.
Dalio recognized two forces that sometimes “prick” a bubble: rising rates of interest that make debt costlier to service, and a surge in inventory issuance as corporations rush to capitalize on investor enthusiasm. He even cited a real-time instance: a good friend operating an AI firm informed him he was elevating a whole bunch of hundreds of thousands of {dollars} particularly as a result of he anticipated a downturn — cash he plans to make use of to purchase struggling rivals as soon as the market turns. The rising rates of interest align carefully with Slok’s warning for years that markets ought to put together themselves for a “higher for longer” regime.
His greater warning wasn’t about the market—it was about what comes after. In Dalio’s telling, the bursting of an AI bubble isn’t only a monetary occasion however the spark for the form of political and geopolitical battle that traditionally accompanies the finish of an 80-year cycle — which means the actual danger to arrange for could not be a portfolio loss, however the unrest that follows one.
