Dalio issues another warning: AI is a “classic bubble,” and the tipping point of the bubble is “very close.”

According to the Zhihui Finance APP, Bridgewater Associates founder Ray Dalio has warned that artificial intelligence is a “classic bubble,” and that due to rising interest rates and the need to convert wealth into cash, this bubble is approaching its breaking point.

On Wednesday, Dalio stated at the Forbes Global CEO Conference in Singapore that people are borrowing huge amounts of debt to fund artificial intelligence. As interest rates continue to rise, the moment when the bubble starts to burst has arrived.

The billionaire said, “We are in this cycle, right before that point, but fast approaching it,” and added, “I think we are very close to that point.”

He made these remarks at a time when tech giants are spending hundreds of billions of dollars betting on artificial intelligence, increasingly relying on debt financing, with market gains being concentrated in just a handful of stocks. Global bond yields have soared to their highest levels in decades, driving up the financing costs for the massive investments needed to build out AI infrastructure.

Nevertheless, stock valuations continue to rise, and optimism about technology earnings this week has propelled the S&P 500 and Nasdaq 100 indices to record highs.

Dalio has long warned of an artificial intelligence bubble. He has stated that there are other factors that could trigger the bursting of the bubble, including wealth taxes and various other initiatives to convert unrealized gains into cash.

“Everyone says ‘I’m worth $1 billion,’ but okay, try spending it,” he added. “To actually spend it, you have to sell your wealth to get money—and usually, this is the stage where the bubble bursts.”