Norway wealth fund sounds alarm on AI stock market bubble
The head of Norway's sovereign wealth fund has warned that soaring AI-driven stock valuations could trigger a sharp correction. How exposed is the world's largest sovereign wealth fund to a market downturn?
Norway's Government Pension Fund Global, the world's largest sovereign wealth fund, has expressed concern about the potential risks posed by artificial intelligence (AI) investments to its $2.4 trillion portfolio. CEO Nicolai Tangen warned that, in a worst-case market scenario, a significant loss of up to $186 billion could occur.
The AI chip trade, which has contributed to the fund's record profits in recent years, is now seen as a major risk. A sharp market correction could potentially erase much of the wealth accumulated over the past 30 years. Many fund managers, including an expert quoted by the source, share Tangen's cautious stance on stock valuations, but are reluctant to take profits.
The Norwegian government mandates that the fund follow a passive, globally diversified strategy, leaving little room for active management or hedging. While Asia and the Middle East have more diversified portfolios, they also face similar risks. The fund's large inflows from oil and gas revenues provide some protection, but experts warn that the fund is unusually exposed to AI-related risks. Despite recent AI-related stock recoveries, there is uncertainty about future market trends.
Written by urgent.news from DW English (Top Stories)'s reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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