The world's largest sovereign wealth fund 'AI optimism'…"It might not be a bad bubble"

Nicolai Tangen, CEO of the Norwegian sovereign wealth fund

Large-scale capital used for tech investment

Could raise productivity in the long term

Improves fund investment decisions and operations

Nicolai Tangen, chief executive officer (CEO — pictured) of Norway's sovereign wealth fund, the world's largest pension fund, expressed an optimistic view on the 'AI bubble' theory.

In an interview with the Financial Times (FT) on the 23rd (local time), Tangen said, "The recent rapid increase in investment in the AI sector shows several signs of a bubble," but added that "it will raise global economic productivity in the long run."

He said it is difficult to value AI using traditional methods because AI is driving a 'major societal transformation.' Even if some areas of AI are overvalued, the large inflows of capital into the sector could be used for technology investments that boost productivity, such as automation, data processing, and model development. Tangen noted, "Even if (AI) is a bubble, it might not be such a bad bubble." He advised investors to be able to distinguish between hype and genuine innovation in a market led by a few big tech firms.

He cited the Norwegian sovereign wealth fund as a prime example of AI actually improving productivity. "At the Norwegian sovereign wealth fund, productivity has increased by up to 20% thanks to AI," he said, adding that "AI has changed how the Norwegian sovereign wealth fund operates." AI is being used in all areas, from investment decisions to internal communication.

Tangen said, "Five years ago the technology department was not a notable presence," and explained, "At our fund, already 460 of the 700 actually do coding."

Managing $2 trillion in assets, the Norwegian sovereign wealth fund invests in 8,500 companies. It has a relatively high allocation to U.S. big tech. As of the second quarter, the largest holding was Nvidia (about $50.4 billion). This was followed by Microsoft (MS), Apple, Amazon, and Alphabet in terms of investment weight.

However, Tangen warned that the rapid spread of AI could deepen social and geopolitical inequality because adopting AI requires huge costs for electricity and digital infrastructure. He expressed concern that "the cost of accessing advanced AI models is increasing," and that "the world could divide into countries that can afford this and those that cannot." He also said there is a risk that policymakers may not keep up with the pace of technological change.

He pointed to AI regulation as a factor that could widen the gap in economic growth between countries. He noted that the U.S. has abundant AI technology with relatively lax regulation, while Europe may have insufficient AI technology and excessive regulation that could hinder growth.

Reporter Myunghyun Han wise@hankyung.com