Ray Dalio says we’re definitely in a bubble, but that doesn’t mean you should sell yet

As AI spending forms a bubble in the market, investors don’t need to abandon their positions, according to Bridgewater founder Ray Dalio.

“Don’t sell just because there’s a bubble,” Dalio said Thursday on CNBC’s “Squawk Box.” “But if you look at the correlations with returns over the next 10 years, when you’re in that territory you get very low returns.”

Dalio’s comments come as AI darling Nvidia surged more than 5% on Thursday on better-than-expected earnings and forecasts. Nvidia CEO Jensen Huang dismissed bubble concerns, telling analysts on Wednesday that “we’re seeing something very different.”

Nvidia’s rally boosted the stock market as Wall Street appeared to have moved past fears about slowing AI business that weighed on stocks in recent sessions.

The heavy on technology Nasdaq Composite soared nearly 17% in 2025, propelled by gains in mega-cap technology stocks amid continued enthusiasm around AI.

As Dalio sees a bubble forming, he says it would also take something to burst it. The billionaire investor said it was unlikely to come from tighter monetary policy, but could come from higher wealth taxes.

“The picture is pretty clear, in the sense that we are in bubble territory,” Dalio said. “But we don’t have the peak of the bubble yet.”

Dalio said market participants should look to diversify their portfolios through investments such as gold. The metal – which has long been considered a safe haven – has reached all-time highs this year.