Ray Dalio Flags AI As 'Early Stages Of A Bubble,' Comparing Today's Optimism To 'About 80%' Of 1929 Mania

Group 1 - The enthusiasm for artificial intelligence (AI) is accelerating, resembling extreme periods in market history, with Ray Dalio describing it as being in the "early stages of a bubble" [1] - A significant concern is the ability of companies to translate AI adoption into profits, with an MIT study indicating that 95% of generative AI pilot programs have not yet produced profits [2] - Dalio suggests that the rapidly rising valuations of major technology companies may face pressure as businesses fully integrate AI, comparing the current AI bubble to being at "about 80%" of the euphoria seen before the 1929 stock market crash and the 2000 dot-com bubble [3] Group 2 - Dalio raised concerns about U.S. monetary policy, indicating that the Federal Reserve's stance is a key unknown for markets, especially with the potential for a new chair who favors lower interest rates [5] - A more accommodative monetary policy could support share prices and contribute to further market excesses [5] - Looking ahead, Dalio emphasized the importance of diversification, highlighting gold as a strong performer, which outperformed the S&P 500 by 47% last year [6]