The boss of the $260 billion Future Fund has hosed down concerns the artificial intelligence investment bonanza is a bubble, pointing to the broad application to come from the technology.
Amid market debate over the surging valuations of AI businesses and the enormous spending on AI-linked data centres, Dr Raphael Arndt acknowledged the risk of a bubble forming, but said the technology could have major benefits for productivity.
“I don’t think it’s a bubble – I think there’s a risk of a bubble,” he told a Melbourne audience on Wednesday.
Raphael Arndt, chief investment officer of Future Fund.Credit: Bloomberg
“At the moment, AI capex [capital expenditure] has been largely funded by earnings,” Arndt said. “That’s not a bubble. I think the applications are as broad as you can imagine. And one of the bigger challenges is imagining [them].”
UBS expects global AI spending to hit US$375 billion ($574.7 billion) this year. There are nearly 500 AI “unicorns” or companies with valuations of $US1 billion or more, according to New York-based CB Insights, with 100 of them founded since 2023.
Arndt told ASIC’s 2025 Annual Forum held in Melbourne that the Future Fund had “a very large exposure to AI across the whole value chain, from the data centres and energy all the way through to the applications”.
The sovereign wealth fund’s investment returns since inception exceeded $200 billion for the first time in September. The Future Fund was created by the government in 2006 with a goal of meeting its unfunded superannuation liabilities. It doesn’t break out its share of investment into AI-related business, funds and ventures.
Arndt said a potential use for AI was its eventual deployment to “enhance productivity in the care economy, in healthcare, in aged care, in child care, right across the spectrum … because you can leverage humans to be more effective, to make fewer people to do the same thing”.
Evidence of productivity growth benefiting from AI remained elusive, said ABS Australian Statistician Dr David Gruen, who participated in the same panel discussion.
GDP per capita growth in the year to June was 0.2 per cent, which Gruen described as “sluggish”.
“There’s obviously a fair bit of technological change, but it’s not clear to me that that technological change… is material on the aggregate scale,” said Gruen.
“If it was, you ought to be seeing faster productivity growth, and we’re not, just about anywhere.”
Data centres are critical for the expansion of the AI-driven economy as they provide the computing capacity needed for the complex data-crunching behind the technology.
In February, Future Fund upped its stake in data centre developer and operator CDC, the “largest operator and developer of data centres across Australia and New Zealand”, to 34.6 per cent.
A June speech by Future Fund board chair Greg Combet for former Labor minister said the fund believed “that AI is coming faster than perhaps many anticipate”.
“Data centres, energy infrastructure and renewable generation all expose the Future Fund to what … will be a sustained growth story in the advancement and adoption of artificial intelligence,” said Combet in a speech to the Committee for Economic Development of Australia.
Goldman Sachs has suggested a mainstream uptake of generative AI could result in productivity growth of 15 per cent “when fully adopted”.
AI stocks have had an extraordinary rise, with chip-making giant Nvidia last month becoming the first public company to have a market capitalisation of $US5 trillion – an amount roughly twice the size of Australia’s entire sharemarket.
US hedge fund manager Michael Burry, who successfully bet against subprime mortgages in the lead-up to the 2008 global financial crisis, last week reportedly made a U$1.1 billion bet against the share prices of two AI powerhouses – Nvidia and Palantir technologies.
Given its large presence in global markets, the Future Fund is a major investor in the US sharemarket, which has been propelled higher this year by strong growth in technology stocks, which are benefiting from hype surrounding AI.
In Combet’s June speech, he also warned that the United States had become a riskier investment destination and was likely to attract a smaller share of global capital flows, saying the Trump administration had “added layers of volatility and uncertainty” to financial markets.
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