The US still fears an AI bubble

Is AI a bubble about to burst? Not a chance, US Treasury Secretary Scott Bessent says, per Bloomberg. He cited big spending by the likes of Microsoft, Google, and Meta as well as revenue growth at Anthropic and OpenAI.

And yet: Ray Dalio, founder of Bridgewater, the storied US investment firm, called AI a “classic bubble” nearing its bursting point, Bloomberg also reports. Dalio cited rising interest rates and the debt piling up to fund AI infrastructure.

The question is nearly existential for the Trump administration, which some analyst think faces bleak prospects in the upcoming November midterm elections. AI is just about the only growth sector in the US economy right now and any downturn could hit both financial markets and the real economy in ways that tank Trump’s already-abysmal approval ratings.

As we noted above: Infrastructure and other investors in the Gulf are keeping a close eye on chatter that there’s a bubble that could burst.

The good news: US software stocks hit their highest level since November 2025 on Tuesday, Reuters reports, suggesting some investors don’t see there’s a bubble.