Norway’s sovereign wealth fund, the world’s largest investor in the stock market, has made a huge profit from the recent boom in artificial intelligence (AI), while also urging its portfolio companies to be more responsible and transparent about the use and impact of the technology.
AI drives record returns for the fund
The fund, which is fueled by Norway’s oil and gas revenues, earned 1,501 billion crowns (€131.1bn) in the first half of 2023, according to its latest report. This is the highest return in its history, and much of it is due to the fund’s shares in tech companies such as Apple, Alphabet, Microsoft, and Nvidia that have benefited from the growing demand and innovation in AI.
The fund’s equity investments, which account for 73.2% of its portfolio, returned 13.7% in the first half of the year. The tech sector was the best performer, with a return of 28.4%. The fund’s holdings in Apple alone increased by 250 billion crowns (€21.8bn) in value.
The fund’s chief executive officer, Nicolai Tangen, said that AI was “one of the most important drivers” of the fund’s performance. He also said that AI was “a huge opportunity” for the fund and the world economy, as it could boost productivity, innovation, and welfare.
AI poses serious and uncharted risks, fund warns
However, the fund also warned that AI could bring “severe and uncharted risks” to companies, society, and human rights. In a letter published this week, the fund called on its more than 9,000 portfolio companies to get serious about how they handle the threats and opportunities provided by the rapid advances in AI.
The letter suggested that companies should develop their expertise on AI at the board level, and be able to explain how their systems are designed and trained. The fund also urged companies to disclose and mitigate the potential risks of AI in terms of regulatory and reputational issues, as well as broader societal implications related to discrimination, privacy, and disinformation.
The fund said that it supports the development of “a comprehensive and cohesive regulatory framework for AI that facilitates safe innovation and mitigation of adverse impacts”. It also said that it would vote against companies that failed to deliver on AI expertise at directorial level.
The fund’s CEO Tangen said that “boards are absolutely not on top of this” and that many companies were “not aware of what they are doing” with AI. He also said that AI could pose “existential threats” to some businesses if they did not adapt to the changing environment.
AI requires human values and oversight, fund says
The fund also stressed that AI should align with human values and intent, and that systems that can pose particularly severe risks to people, society, or business outcomes should be subject to additional controls. The fund said that it expects companies to implement robust governance mechanisms for AI, including human oversight and accountability.
The fund also said that it would monitor how companies use AI in their operations and decision-making processes, and how they engage with stakeholders on AI-related issues. The fund said that it would use its role as a long-term and responsible investor to promote good practices and standards for AI among its portfolio companies.
The fund’s CEO Tangen said that he was optimistic about the future of AI, but also realistic about its challenges. He said that “if you don’t think there are opportunities with AI, then in my mind you are a complete moron” but also added that “if you don’t think there are risks with AI, then you are also a complete moron”.
