Ray Dalio says Middle East is becoming a ‘Silicon Valley of capitalists’

The Middle East is fast emerging as one of the world’s most powerful AI hubs, Bridgewater Associates’ founder Ray Dalio said Monday, comparing the region’s rise to Silicon Valley’s pull for all things tech. 

Speaking to CNBC, Dalio said the United Arab Emirates and its neighbors have combined vast pools of capital with an influx of global talent, creating a magnet for investment managers and AI innovators alike.

The UAE and Saudi Arabia have this year launched multibillion-dollar initiatives to build cloud, data centers and other AI infrastructure, underpinned by sovereign-wealth capital and global tech partnerships.

A $10 billion agreement between Google Cloud and Saudi Arabia’s Public Investment Fund announced this year aims to create a “global AI hub” in the country, as part of a broader push to host data-centers and AI workloads locally.

Earlier this year, technology giants OpenAI, Oracle, Nvidia and Cisco combined forces to build a major Stargate artificial intelligence campus in the United Arab Emirates.

When asked if he thinks that the UAE, Saudi Arabia and Qatar can be leaders in the AI race, Dalio said, “What they’ve done is to create talented people. So this [region] is kind of becoming a Silicon Valley of capitalists … So now people are coming in … money is coming in, talent is coming in.”

Dalio, who has been visiting Abu Dhabi for more than three decades, said the Gulf’s transformation is the result of deliberate statecraft and long-term planning. He described the UAE as “a paradise in a world that’s troubled,” citing its leadership, stability, quality of life and ambition to build a globally competitive financial ecosystem.

“There’s a buzz here, the way there’s a buzz in San Francisco, places like that, about AI or technology. It’s very similar to that,” Dalio said.

The Bridgewater founder warned that the global economy was headed toward an uncertain future in the near term due to a confluence of multiple forces, reiterating his concerns about markets being in bubble.  

“The next year or two in the future is going to be more precarious,” he said, pointing to the convergence of what he calls the three dominant cycles: debt, U.S. political conflict and geopolitics.

The global debt overhang is already forcing stress into pockets of the market.

“We’re seeing cracks in the markets in a number of ways, private equity, venture capital, debt that’s being refinanced, and all of those. So we are in a bubble, I believe, by almost all of those measures,” Dalio said, highlighting similarities with the 2000 bubble but not the one in 1929.

He also expects U.S. politics to become more disruptive heading into 2026. “As we go into the 2026 elections … you will see a lot more conflict in different ways,” Dalio said, adding that elevated interest rates and concentrated market leadership compound the vulnerability.

“Every country … cannot continue to accumulate the debt they have, yet politically they can’t raise taxes and they can’t cut benefits. So they’re stuck.” That fiscal bind feeds into a broader rise in domestic polarization: “We now have populism of the left and populism of the right … which means irreconcilable differences.”

Dalio reiterated his view that the AI rally is in bubble territory, but advised investors not to rush for exits just because valuations are stretched.

Concerns about an AI bubble have been swirling in recent months, with notable voices such as OpenAI CEO Sam Altman suggesting that the AI market was in a bubble. Investor Michael Burry, who called the 2008 subprime mortgage crash, has forecast the artificial intelligence market bubble could collapse in the next two years.

“All the bubbles took place in times of great technological change,” Dalio said. “You don’t want to get out of it just because of the bubble. You want to look for the pricking of the bubble.”

The catalyst for that “pricking,” he said, usually comes from a tightening of money or a forced need to sell wealth to meet obligations.

He also warned of stress in venture capital, private equity and commercial real estate, sectors where cheap debt is now rolling over at higher rates.