Bridgewater Associates founder Ray Dalio warned that the artificial intelligence-driven rally in technology stocks has entered the early stage of a bubble, and that future U.S. monetary policy is likely to inflate it further.

In a post, Dalio said U.S. equity markets in 2025 had significantly underperformed non-U.S. equities and gold, arguing that investors are increasingly shifting allocations away from U.S. assets.

“It is clear that investors prefer non-U.S. stocks over U.S. stocks. Similarly, they prefer non-U.S. bonds over U.S. bonds and U.S. dollar cash,” Dalio wrote.

He said there is substantial uncertainty surrounding future Federal Reserve policy and productivity growth, but added that signs suggest the new Fed chair and the Federal Open Market Committee are likely to favor policies that suppress nominal and real interest rates.

“That will support asset prices, but it will also further inflate the bubble,” he said.