The Middle East is emerging as one of the most powerful artificial intelligence (AI) hubs globally, according to Bridgewater Associates founder Ray Dalio, who compared the region's resurgence to the dynamic exerted by Silicon Valley in terms of technology.
Speaking to CNBC, Dalio stated that the United Arab Emirates and its neighboring countries have combined massive capital with an influx of global talent, creating a magnet for fund managers and innovators in the AI sector. The United Arab Emirates and Saudi Arabia this year began multi-billion dollar initiatives to create cloud infrastructure, data centers, and other AI infrastructure, supported by sovereign wealth funds and international technology partnerships. A $10 billion deal between Google Cloud and the Saudi Public Investment Fund (PIF), announced this year, aims to create a "global AI hub" in the country, as part of a broader effort to host data centers and AI workloads locally. Earlier this year, tech giants such as OpenAI, Oracle, Nvidia, and Cisco joined forces to build a large Stargate AI campus in the United Arab Emirates.
Asked if he believes the UAE, Saudi Arabia, and Qatar can lead the AI race, Dalio said: "What they've done is they've created talented people. So this [region] is becoming in a way a Silicon Valley of the capitalists. Now people are coming, the money is coming, the talent is coming."
Dalio, who has been visiting Abu Dhabi for more than three decades, said the Gulf's transformation is the result of deliberate state strategy and long-term planning. He described the UAE as "a paradise in a world that's being tested," citing the leadership, stability, quality of life, and ambition to create a globally competitive financial ecosystem. "There's a buzz here, just like there's a buzz in San Francisco and similar places, around AI and technology. It's very similar to that," Dalio said.
The next two years are "precarious"
The Bridgewater founder warned that the global economy is heading toward an uncertain future in the immediate term, reiterating his concerns that markets are in a "bubble."
"The next one to two years will be more precarious," he said, pointing to the convergence of what he calls three dominant cycles: debt, political conflict in the US, and geopolitics. The weight of global debt is already causing pressures in parts of the market.
"We're seeing cracks in the markets in various ways: private equity, venture capital, debt that is refinancing, and all of that. So we are in a bubble, I believe, based on almost all those measures," he stated, highlighting similarities to the 2000 bubble, but not to that of 1929. Dalio also predicted that American politics will become more destabilizing as the 2026 elections approach.
"As we go into the 2026 elections, you're going to see a lot more conflict in various ways," he said, adding that high interest rates and concentrated market leadership are intensifying vulnerability. "No country can continue to accumulate the debt that it has, yet politically they cannot raise taxes and they cannot cut benefits. So they are boxed in." This fiscal impasse is fueling a broader increase in internal polarization:
"Now we have left-wing populism and right-wing populism, which means unbridgeable differences." Dalio reiterated his position that the rally in AI is in "bubble" territory, but advised investors not to rush for an exit simply because valuations are excessively high.
Concerns about an "AI bubble" have intensified in recent months, with prominent voices like OpenAI CEO Sam Altman arguing that the AI market is in a bubble. Investor Michael Burry, who predicted the 2008 subprime mortgage crisis, has warned that the artificial intelligence "bubble" could collapse within the next two years. "All bubbles happened in periods of great technological change," Dalio said. "You don't want to get out just because there's a bubble. You want to look at the burst of the bubble." According to him, the catalyst for this "burst," as he put it, usually comes from a tightening of liquidity or a forced need to sell assets to cover obligations.
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