Ray Dalio Says Investors Are Chasing AI Hype Like It's 1999 And It Could End Just As Badly: Here's What He Recommends

In a wide-ranging conversation with David Friedberg, billionaire investor Ray Dalio compared today's AI investment frenzy to the dot-com bubble, warning that overhyped assets, rising interest rates and global tech tensions could spell trouble for unprepared investors.

What Happened: Speaking with Friedberg on the All-In podcast earlier this year, Dalio underscored the risks of blindly investing in hot sectors like artificial intelligence without regard to valuation or macroeconomic conditions.

"This looks quite a lot like 1998 or '99," Dalio said, referencing the peak of the dot-com era. "A great company that gets expensive is much worse than a bad company that's really cheap."

While both Friedberg and Dalio agreed that investing in productivity, such as AI, robotics and manufacturing, makes long-term sense, Dalio warned that prices and global competition cannot be ignored.

"The AI war… It's a war that no country can lose because it's more important than profits," he said, highlighting the strategic urgency in the U.S.–China tech race.

Dalio also raised concerns about market concentration and herd behavior. "The world is so leverage long," he said, referring to investors piling into similar bets with borrowed money. "You have to pay attention to correlation."

He stressed the importance of uncorrelated assets and geographic diversification. "That's why when I look at something like gold, it's interesting… it reduces the risk of the portfolio," he added.

Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox.

Why It's Important: Dalio's remarks come as AI stocks dominate market headlines and portfolios. Names like Nvidia Corp. NVDA, Microsoft Corp. MSFT and others have seen soaring valuations, driven by enthusiasm around generative AI.

But as monetary policy tightens and geopolitical tensions rise, Dalio cautions investors not to confuse a great narrative with a safe investment. His advice? Don't just chase the winners—watch the price, manage risk and diversify broadly.

"Everybody says it's going to be great," Dalio said. "But the price has to be paid attention to."

In an environment where excitement can outpace fundamentals, Dalio's message is clear: the future may be AI-powered, but smart investing still depends on discipline.

Check out more of Benzinga's Consumer Tech coverage by following this link.

Read Next: