Nvidia, Apple, Google fuel record $185 billion gain for Norway’s wealth fund, but CEO say, ‘We are really cautious’

Norway's sovereign wealth fund, the world's largest, reported on Wednesday a record $185 billion in investment returns in the first half, recovering from heavy losses in the first three months of the year.

The $2.3 trillion fund, managed by Norges Bank Investment Management, returned 11.5% in the second quarter, according to a statement. It was the best result since the second quarter of 2020.

Equity investments drove the gains, with 16% return, while fixed income contributed 1.1%. Unlisted real estate and infrastructure investments both returned 1.8% in the quarter.

“Of course, after a rally like that, you are a bit more nervous, a bit more conscious about all the dangers out there,” CEO Nicolai Tangen said in a Bloomberg TV interview. “We are seeing a lot of reasons to be really cautious. We are seeing, you know, AI valuations. We are seeing geopolitics.”

How did the fund invest its money?

The fund is invested in around 7,100 companies across the globe and, in aggregate, owns around 1.5% of all listed companies worldwide. It is also one of the world’s biggest investors in artificial intelligence-linked companies.

Its biggest stockholdings are the AI chip giant Nvidia (612 billion kroner), Apple (522 billion kroner), Google parent Alphabet (499 billion kroner), Microsoft (347 billion kroner) and the Taiwanese chip maker TSMC (332 billion kroner).

“Chips drive fund’s value on a scale not seen before,” Tangen said in a news conference in Arendal, southern Norway.

But with the growth driven by a specific sector, the fund's value is dependent on "an ever smaller number of companies", Tangen noted.

Risk that comes with the rally

Speaking in another interview with Bloomberg, Tangen noted growing concerns that circular financing is inflating an AI bubble. “It increases the risk in the system, if anything goes wrong,” he said.

The fund previously said an AI bubble could cost the world’s largest wealth fund 35% of its value. Geopolitical risk, including global investment restrictions and severe tariffs, could wipe out up to 37% of the fund’s value in a worst-case scenario.

The fund’s top 10 holdings make up nearly 25% of its total value, Tangen said, adding that he has never seen the fund so heavily concentrated in a few stocks.

Founded in the early 1990s, NBIM now owns about 1.5% of the world’s total listed companies. It invests in line with a benchmark index set by Norway’s finance ministry and its scope for active moves is limited. Its portfolio spans equities, fixed income, real estate, and renewable infrastructure, all outside Norway.

(With inputs from Reuters, Bloomberg and AFP)