Billionaire investor Ray Dalio, the founder of hedge fund Bridgewater, believes that while artificial intelligence spending is creating a market bubble, investors don’t need to panic or sell their holdings right away. Speaking on CNBC’s Squawk Box, Dalio said, “Don’t sell just because there’s a bubble.” However, he warned that historically, when markets reach this kind of territory, the returns over the next 10 years tend to be much lower than average.
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His comments came just after chipmaker Nvidia (NVDA) posted better-than-expected earnings and strong guidance. Unsurprisingly, though, CEO Jensen Huang dismissed any talk of a bubble by saying that the firm sees something very different. Nevertheless, Nvidia’s strong performance helped lift the broader stock market and calmed recent worries that the excitement around AI stocks was fading.
Even though Dalio sees signs of a bubble, he stated that there still needs to be a catalyst that would cause it to burst. Interestingly, he doesn’t think it will come from higher interest rates, but he said it could possibly come from increased wealth taxes. Regardless of what the catalyst may be, Dalio advised investors to diversify their portfolios as a way to protect against potential risks. More specifically, he pointed to gold (GLD), which has recently reached all-time highs due to its safe-haven status.
What Is a Good Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Nvidia stock based on 37 Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average Nvidia price target of $252.05 per share implies 34.1% upside potential.
