Bridgewater founder Ray Dalio believes the artificial intelligence (AI) sector is showing signs of a bubble, but advises investors not to panic-sell their positions solely for that reason.

Key Takeaways from Dalio's Comments:

• Bubble Territory: Dalio stated that the market is "in that territory of a bubble," noting that such conditions historically lead to very low returns over the following decade.
• No Need to Flee: His primary advice is, "Don't sell just because there's a bubble," emphasizing that a bubble alone is not a signal to exit.
• What Would 'Pop' the Bubble: He suggested that the catalyst for a downturn is unlikely to be tighter monetary policy, but could potentially be the implementation of higher wealth taxes. For now, he sees no immediate trigger, noting, "we don't have the pricking of the bubble yet."
• Recommended Action: Dalio advised investors to diversify their portfolios, specifically highlighting gold as a traditional safe-haven asset. The metal has surged to all-time highs this year.

His comments come as AI leader Nvidia surged over 5% on strong earnings, lifting the broader market and reigniting the debate over AI stock valuations.