Written by Scott Murdoch
The chief investment officer of Australian pension fund Aware Super said some funding deals in the global artificial intelligence industry were flashing an “orange” light, but profit growth supported the sector's current valuation.
Simon Warner, who was appointed CIO of the A$210 billion ($135.75 billion) fund last week, said the future trajectory of the AI industry's economic model will be the most prominent financial market risk in 2026.
The soaring valuations of AI stocks are starting to weigh on global markets as investors wonder when their massive capital investments will pay off.
“We're very comfortable that for most of the past few years, our capital investments, not only in our large language models, but also in our data centers and all the infrastructure that supports AI, have come from very stable sources of funding, primarily from retained earnings,” Warner told Reuters in an interview.
“There have been some instances over the last six months or so where it's eased a little bit, we've seen more circular lending, a little bit more conduit lending. There's nothing that's red, but there's certainly orange.”
Warner said there is an interdependence between the capital investment valuations of the so-called “Magnificent Seven” stocks and broader wealth effects and domestic demand in the United States.
“I think there are dynamics there, but if one of these pillars stumbles, we will be able to fix it,” he said.
“That's something we're monitoring very closely.”
meta 
meta In late October, the company announced a $27 billion financing deal with Blue Owl Capital to fund the world's largest data center project, as major technology companies race to build the infrastructure needed to power their artificial intelligence ambitions.
microsoft 
MSFT The company had the second-largest listed equity investment in balanced funds at the end of June, according to filings. Also owned by Nvidia 
NVDAapple 
AAPLalphabet 
google And especially meta.
Warner said some investors remain wary of valuations for AI and tech stocks, but that valuations are at risk if capital spending levels start to decline.
(1 dollar = 1.5101 Australian dollar)
