Billionaire investor Ray Dalio recently sounded the alarm on the rising U.S. debt and deficits, warning that they pose serious risks to the government bond market. But his concerns don’t end there, Dalio is also increasingly uneasy about the broader state of the economy.
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“Right now we are at [a] decision-making point and very close to a recession, and I’m worried about something worse than a recession if this isn’t handled well,” the founder of hedge fund Bridgewater Associates said in a recent interview. “We’re witnessing a classic breakdown of the major monetary, political, and geopolitical orders. This kind of breakdown happens only once in a lifetime, but it has happened many times in history when similarly unsustainable conditions were in place.”
Dalio is a Wall Street titan, boasting a net worth of $14 billion, and known for his resilient investing approach, spreading risk across different asset classes to build a portfolio that can hold up in almost any economic climate. That will come in handy if his current concerns become a reality.
But while Dalio is warning of potential impending doom, that doesn’t mean the firm he founded – which he no longer actively runs – is stepping away from its stock-buying activities.
Dalio advocates a flexible strategy, and it appears Bridgewater is adhering to that mindset. The firm’s portfolio includes AI giants such as Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) but recently it has been prioritizing one giant over the other, cutting back its holdings of one but adding the other.
So, let’s see what exactly Dalio’s firm has been up to, and with help from the TipRanks database we can find out whether the Street agrees with its latest moves.
Nvidia
There aren’t many names more closely associated with the AI trend than Nvidia. Co-founded in 1993 by CEO Jensen Huang, the semiconductor company popularized the GPU (graphics processing unit), initially focusing on the gaming market, which served as its core business for many years. Eventually, the company realized these processors had far broader potential – GPUs could power scientific computing, finance, crypto mining, and, ultimately, AI.
As you already know, the pivot to AI was the real game-changer – the move that transformed Nvidia from a semiconductor heavyweight into one of the world’s most valuable companies. Its background gave it a head start in the data center segment – the infrastructure powering AI – and its chips quickly became known as the industry’s best, securing Nvidia over 80% of the market. Real-world sales soared, followed by massive share price growth.
Recently, however, some think there are cracks appearing in the growth story. A particular concern revolves around the ban of selling high-end AI chips to China, a major market for the company.
That said, the company managed to shake off those worries in its recently released FQ1 print (April quarter), which featured another beat-and-raise performance. Revenue surged 69.2% year-over-year to $44.1 billion, beating analyst expectations by $700 million. The data center segment generated $39.1 billion, marking a 10% increase from the previous quarter and a 73% jump from the same period last year. At the other end of the spectrum, adjusted EPS reached $0.81, topping the Street’s forecast by $0.06.
Dalio’s Bridgewater might have taken a look at that and wondered if it made the right move. During Q1, the firm offloaded 655,382 shares, reducing its NVDA holdings by 19%.
For D.A. Davidson analyst Gil Luria, however, that trim makes sense. The Nvidia skeptic points out that China is one issue that will not fade so fast.
“China is, and will remain the largest overhang on NVDA shares until we get resolution from the Trump administration,” the 5-star analyst said. “It was highlighted that the company will experience ‘material adverse impact on [their] business going forward,’ if they are unable to sell into the Chinese market at all, even beyond the immediately outlined impact from this quarter and next on H20 bans. NVIDIA estimates that the Chinese market represents roughly $50B in TAM within the near-future, and without having a product to serve this market, they are handing the entire Chinese opportunity to homegrown manufactures such as Huawei. According to Mr. Huang, China, despite the prevailing insinuation from current policy, has the capabilities to compete head-to-head with the United States in chips and AI.”
Quantifying his stance, Luria rates NVDA shares as Neutral while his $135 price target implies the stock is fully valued. (To watch Luria’s track record, click here)
Luria, though, is amongst a minority on Wall Street. Elsewhere, the stock receives an additional 36 Buys, 3 Holds and 1 Sell, for a Strong Buy consensus rating. The average price target stands at $171.62, implying the stock will gain 21% in the months ahead. (See NVDA stock forecast)
Microsoft
If Nvidia is the de facto AI poster boy, Microsoft’s involvement with the trend has facilitated its growth.
The tech giant plays a central role in the AI world, both as a platform provider and an innovator. Its most high-profile move was a multi-billion-dollar investment in OpenAI, the company behind ChatGPT. Through this partnership, Microsoft became OpenAI’s exclusive cloud provider, hosting large models like GPT-4 on its Azure AI infrastructure.
Beyond that, Microsoft has been steadily integrating AI into its own products. Tools like Copilot in Microsoft 365 (Word, Excel, Outlook, etc.) use advanced language models to help users write, analyze, and automate tasks. It’s also developing custom AI models for enterprise clients and supporting a growing developer ecosystem through Azure’s AI services.
Nvidia enters the picture on the infrastructure side. Microsoft partners with Nvidia to power its data centers using the industry’s most advanced AI chips. That said, it’s also developing its own hardware – such as the Azure Maia chips – to gradually reduce reliance on third-party providers.
Meanwhile, Microsoft’s recent Q1 earnings helped reinforce its position as the current market cap leader. Revenue rose 13.2% year-over-year to $70.06 billion, beating Street expectations by $1.62 billion. EPS also exceeded forecasts, coming in at $3.46 – $0.24 ahead of consensus.
Those numbers likely caught the attention of Ray Dalio’s Bridgewater. The hedge fund boosted its position in Microsoft by 22% in Q1, scooping up 142,399 shares now worth nearly $65.8 million.
Nvidia also has a fan in Jefferies Brent Thill, an analyst ranked amongst the top 2% of Wall Street stock experts. Having attended Microsoft’s recent Build in Seattle event, Thill came away impressed with what was on offer.
“With announcements like MCP, A2A, open sourcing GitHub Copilot Chat in VS Code, and the inclusion of both xAI’s Elon Musk and OpenAI’s CEO, Microsoft is clearly positioning itself as an open platform enabling choice,” the 5-star analyst said. “We’re bullish on its support of MCP across Azure, D365, Copilot Studio, and Windows 11, as it positions Microsoft’s AI stack as a central hub, making it easier to connect apps and data from systems of record… We continue to believe that as Gen-AI moves from the Infrastructure layer to the Platform/Application layers, Microsoft is well positioned to capitalize on this shift, wherein a more capital efficient and higher margin recurring revenue model could become a reality, just as it did during the on-prem to cloud transition.”
No surprise here – Thill is firmly in the bull camp, giving Microsoft a Buy rating and setting a $550 price target that suggests upside of 19% over the next year. (To watch Thill’s track record, click here)
Most other analysts are thinking along the same lines, with 30 Buy recommendations versus just 5 Holds backing a Strong Buy consensus. The average price target stands at $514.07, implying a one-year return of 11%. (See MSFT stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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