Jan 29, 2025, 12:00 AM
Jan 29, 2025, 12:00 AM

Norway's sovereign wealth fund profits soar due to tech boom

Highlights
  • Norway's sovereign wealth fund posted a full-year profit of 2.5 trillion kroner ($222.4 billion) for 2024.
  • The fund's significant profits were driven by a strong performance in the American technology sector, largely fueled by advancements in AI.
  • This year marks the second consecutive record-breaking profit for the fund, showcasing its ability to adapt to market trends.
Story

In Norway, the sovereign wealth fund has made headlines after posting staggering full-year earnings. As of January 29, 2025, it reported a profit of 2.5 trillion kroner, equivalent to $222.4 billion, largely due to significant gains in technology stocks. This remarkable profit exceeds its previous record from the year 2023, when the fund earned 2.22 trillion kroner. The gains are attributed primarily to the surge in American tech stocks propelled by advancements in artificial intelligence that dominated the market in 2024. Managed by Norges Bank Investment Management, Norway's sovereign wealth fund is recognized as the largest of its kind globally, boasting a valuation of approximately 19.7 trillion kroner at the end of 2024. The central management team, led by CEO Nicolai Tangen and Deputy CEO Trond Grande, reported a return on investment of 13%, although it slightly underperformed against its benchmark index by 45 basis points. Tangen noted the excellent returns resulting from a robust stock market, with particular emphasis on the strong performance of American technology companies. Certain sectors, especially technology, have driven significant returns due to an AI boom, with notable investors in companies like Apple, Microsoft, Nvidia, and Amazon. The fund's diverse portfolio includes over 8,000 companies across 63 countries, with 70% of its benchmark index consisting of equities. The fund experiences fluctuations linked to current market developments, as evidenced by U.S. tech stocks becoming volatile due to competition posed by a new open-source large language model from Chinese AI lab DeepSeek. This competition sent ripples through the market, impacting stock prices, particularly for firms like Nvidia, where the fund holds a stake of 1.3%. Despite these market challenges, the overarching narrative highlights the sovereign wealth fund's value and its ability to capitalize on favorable market trends. The fund's investments are set against a backdrop of a strong year for equities and the global economic landscape increasingly influenced by innovations, especially in AI. The foundation of the fund lies in its origin, established in the 1990s to strategically invest surplus revenues from Norway's oil and gas sectors, marking a significant evolution in how such wealth is managed and utilized in a rapidly changing global economy.

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