Norway wealth fund warns of potential AI-driven market bubble

Nicolai Tangen, CEO of Norway’s Government Pension Fund Global (GPFG), has warned that an extreme market collapse driven by artificial intelligence valuations is “not completely improbable.” Despite the $2.4 trillion fund reporting a record profit of $186 billion in the first half of the year, Tangen cautioned that a sharp correction in the AI-chip trade could erase decades of accumulated wealth.

The fund, which is financed by Norway’s oil and gas revenues, currently covers approximately one-quarter of the Norwegian government’s budget. Technology stocks account for about one-third of the fund’s portfolio. Tangen described the current economic environment—characterized by low taxes, inflation, and interest rates—as “abnormal.”

While many fund managers share these concerns regarding stock valuations, research suggests they are hesitant to take profits. Bill Megginson, a finance professor at the University of Oklahoma, noted that managers are reluctant to exit positions while a fundamental technological buildout, supported by unprecedented capital spending, shows little sign of weakness. Major tech companies are projected to invest over $1 trillion in AI-related infrastructure, including data centers and power systems.