World's Largest Sovereign Wealth Fund Sees $138B Profit Boost Fueled By AI, After Its CEO Cautioned About Tech 'Froth'

The world’s largest sovereign wealth fund, owned by Norway, has reported a profit of $138 billion in the first half of the year, largely driven by robust returns on its technology stock investments.

What Happened: As per the official report, the Government Pension Fund Global, regulated by Norges Bank Investment Management (NBIM) posted a first-half profit of 1.48 trillion kroner ($138 billion). The fund’s value stood at 17.75 trillion kroner at the end of June.

The overall return for the six months was 8.6%, slightly lower than its benchmark index by 0.04 percentage points. Nicolai Tangen, CEO of Norges Bank Investment Management, stated that equity investments yielded a “very strong” return in the first half of the year.

He attributed this success mainly to technology stocks, which saw increased demand for new solutions in artificial intelligence from internet and software companies and semiconductor suppliers.

Apart from technology, the fund’s investments in financials and health care also reaped high returns.

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Why It Matters: The Norwegian sovereign wealth fund’s significant profit is noteworthy, especially considering the concerns raised by Nicolai Tangen in April about “froth” in the technology sector.

Despite his caution, the fund’s tech investments have paid off, demonstrating the potential of artificial intelligence solutions. This is despite Goldman Sachs’ skepticism about the return on AI investments due to their high costs.

The fund’s performance also underscores its strategic investment choices. In March, it was reported that “Magnificent 7” stocks, including tech giants like Apple Inc., and Amazon.com Inc., were the star attractions for the fund.

Apart from Apple and Amazon, the “Magnificent 7” group includes Alphabet Inc.’s Google, Meta Platforms Inc., Microsoft Corp., Nvidia Corp., and Tesla Inc.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari