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The artificial intelligence investors has prompted a “bubble” in US actions that resembles the construction of Dotcom’s bust on the millennium turn, billionaire investor Ray Dalio has warned.
Dalio told The Financial Times that “price has reached levels which are high at the same time when there is a risk of interest rate, and that the combination can draw the bubble.”
Warning by Dalio, founder of the Hedge Bridgewater Associates Fund and one of the highest profile figures in Wall Street, comes while concerns revolve if the boom in the shares of the US has gone too far. Investors are also concerned about the raised costs of borrowing, concerns that were sharpened after Federal Reserve officials in December shorten their expectations for lowering this year.
“Where we are in the cycle is now very similar to where we were between 1998 or 1999,” Dalio said. “In other words, there is a big new technology that will certainly change the world and be successful. But some people are confusing it to be successful with investments. “
In the late 1990s they saw a result of technology estimates, enabled in part by low interest rates and increasing internet adoption, followed by a brutal correction that came as Alan Greenspan’s strengthened monetary policy.
Nasdaq 100 Nasdaq technology index doubled in 1999, only to drop about 80 percent by October 2002. The index has doubled since the beginning of 2023 after shares such as the Nvidia -centered chipmaker have strengthened above.
Wall Street stocks crashed on Monday after Deepseek, a Chinese company, linked to a little -known defensive fund, published a letter claiming his newest model rivals he of the Openai and Meta platforms in performance but with a lower cost and with less sophisticated devices. Nvidia poured about $ 600 billion in market value on Monday.
Deepseek’s apparent success calls on the possible return of hundreds of billions of dollars invested by Silicon Valley companies in his database, and if China has managed to find a way to compete despite its limitations to its ability to Import high chips from SH.BA.
Openai, supported by Microsoft, announced a plan last week to invest up to $ 500 billion in his infrastructure. Company chatgt was the most rated free app on Apple App Store until it moved Monday from that assistant I Deepseek.
Dalio, who withdrew as chairman of Bridgewater in 2021 but remains on board, has long defended economic engagement with China. He wrote last year that “the main question is not whether or not to invest in China as much as”. He warned, however, that the shares in it are extremely high.
“The technology struggle between China and the US is much more important than the benefit, not only for economic superiority, but for military superiority,” he told FT.
“Those who will pay attention to the benefit with sharp pencils will not win that race,” Dalio added.
Reinforcing the elaboration of him, the founder of Openai Sam Altman wrote on X this month that the company was losing money in its 200-month-old chatgpt pro because of sudden heavy use.
As American technology groups invest glory, President Donald Trump has pledged to support the American one in his second term.
China has provided financial assistance to its industry, including the launch of funds created to support its semiconductor industry. Meanwhile, the US under former President Joe Biden lasted billions of dollars of subsidies for groups to build chips on American soil.
Dalio acknowledged that the state’s support for the developers of his jockey was inevitable given the importance of winning the global race, even if he came to the expense of profit.
“In our system, in general, we are moving on to a more complex industrial policy-which will have government mandated activities and influenced by the government because it is so important.”
“Capitalism only – only the motive of profit – cannot win this battle.”
