Nicolai Tangen heads the world’s largest sovereign wealth fund. Heiko Junge/NTB/AFP via Getty Images
Nicolai Tangen is no stranger to great wealth, managing around $2 trillion in assets as CEO of Norges Bank Investment Management, which manages the world’s largest sovereign wealth fund. But even Tangen isn’t convinced about the magnitude of the ongoing rise in AI stocks. “This means there are risks in the stock market that we’ve never seen before,” he told the Financial Times’ Unheded podcast last week.
Norway’s wealth fund, originally established to invest the country’s oil revenues, owns nearly 1.5% of all shares in publicly traded companies worldwide and is allowed to disburse up to 3% of its holdings each year. . Many of these investments are in the tech space, with the fund owning about 1% of Alphabet (GOOGL), Meta (META), Microsoft (MSFT), Amazon (AMZN), and Apple (AAPL). The fund’s investments in these companies, including stakes in Nvidia (NVDA) and Tesla (TSLA), total approximately $174 billion.
Tangen’s fund may be a major investor in companies at the forefront of AI, but that doesn’t mean he isn’t concerned about it. The former hedge fund manager, who founded London-based AKO Capital, has warned that “we are heading into an era of low returns,” with AI-focused companies dominating the market as a cause for concern. He pointed out that. “The market leadership is very narrow and always focused on companies that have some sort of AI connection,” he told Unhedged, adding that the 10 largest U.S. companies currently account for about 20% of the U.S. S&P 500 index. He pointed out that market value.
The AI revolution ushered in by the launch of OpenAI’s ChatGPT chatbot in 2022 has been an unprecedented boon for Big Tech. An AI crash could have a devastating financial impact as demand for this new technology has pushed companies like Nvidia and Microsoft to over $3 trillion in market caps and propelled other tech companies to the top of the stock market. Some people are concerned that it has a sexual nature.
This concentration is “absolutely alarming,” Tangen said, pointing to the interconnectedness among top AI leaders as another worrying development. Dutch company ASML makes machines that make computer chips used by Nvidia and others, he said, and the company then sells its AI accelerators to Amazon, Meta, Microsoft and others. “There are very few companies involved in them, and they are getting bigger and more important,” he said.
The majority of these companies specifically originate from America. On the other hand, Tangen believes that Europe’s lack of large technology companies is a factor that won’t change anytime soon. “In America, we have a lot of AI and very little regulation. In Europe, we have very little AI and a lot of regulation.” For example, the European Union’s AI law has emerged as one of the most far-reaching efforts to regulate the technology. I’m doing it.
Going forward, Tangen is particularly concerned about the vulnerabilities of AI when it comes to geopolitical risks. “The main focus is on the relationship between the US and China,” the asset manager said, noting the potential impact a disruption in that relationship could have on US dependence on Taiwan and its chip supply chain. pointed out. Such chips play a huge role in everyday life, including “phones, toasters, cars, and dishwashers.” Just everything,” he said.
