Dalio said the current market has many features seen during earlier speculative periods. Investor excitement around AI has pushed valuations higher, while companies linked to the theme are attracting large amounts of capital.
His warning comes as some of the biggest AI-linked companies are moving toward public markets. SpaceX has already completed what was described as the largest IPO ever, while Anthropic and OpenAI are reportedly moving toward valuations near or above $1 trillion.
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Dalio said rising interest rates and a wave of stock issuance are among the main risks that can burst a market bubble. In past cycles, markets have often become vulnerable when investors were willing to pay very high prices for fast-growing companies, just as more companies rushed to sell shares.
SpaceX’s market performance has added to those concerns. Since listing in June, the company has lost more than $500 billion in market value, according to CNBC. Its shares have posted four straight weekly losses and are more than 50% below their intraday high.
Grantham has also warned about bubble-like conditions. He has a long record of calling major market excesses, including the Japanese asset bubble, the dot-com bubble and the US housing bubble before the 2008 financial crisis.
Strategists at Goldman Sachs have also flagged risks around tech valuations and earnings expectations.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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