Serious turmoil continues in global stock markets. Significant fluctuations are occurring in the US, Japan, Korea, and India, leading to major losses for investors. On Thursday, the Sensex and Nifty indices plummeted, resulting in losses exceeding 10 trillion rupees for investors.
Amid this market chaos, foreign billionaire Ray Dalio issued a serious warning regarding artificial intelligence (AI). He stated that the 'classic AI bubble' is on the verge of bursting and explained this with several reasons.
According to billionaire Ray Dalio, one of the key factors contributing to the bursting of the AI bubble is the interest rate hikes by the US Federal Reserve. This forces investors to consider converting their assets into cash. He also noted that investors from India are closely monitoring overseas events, as the Indian stock market is one of the least stable among major markets after 2025.
As reported by Bloomberg, speaking at the Global CEO Conference in Singapore, Dalio said that a huge amount of borrowed funds is being attracted to finance AI, and under conditions of continuously rising interest rates, this bubble could begin to pop. The founder of Bridgewater said: 'We are in a stage of the cycle that precedes, but is approaching this crisis.'
Warning of a possible AI bubble collapse, the billionaire presented a series of statistical data. He pointed out that the 10-year yield has risen to 5.368 percent, a level not seen since 2002. This trend is driven by a strong combination of several factors: growing government debt burdens, trade fragmentation, war-induced inflation pressure, and significant capital needs for AI infrastructure. All these elements reduce the availability of global savings and increase real interest rates.
According to a report referencing a local brokerage firm, the optimistic assumption that inflation will be quickly neutralized by productivity gains from AI remains uncertain. The CDS spread is widening among many AI-related businesses. If profits arrive not immediately but later, the impact of the AI capital expenditure crowding-out effect could persist until at least 2028, leading to inflation and real interest rates being higher than current forecasts.
While foreign billionaires issue warnings about AI for stock markets, the Indian stock market showed a sharp decline on Thursday. Sensex and Nifty fell from the start of trading to the close. At the end of trading, the BSE Sensex dropped by 1045 points, closing at 71,593, and the NSE Nifty fell by 371 points, ending the session at 22,231.