Dr. Raphael Arndt, the chief investment officer of the $260 billion Future Fund, has addressed concerns regarding the potential for an artificial intelligence (AI) investment bubble. Speaking at the ASIC’s 2025 Annual Forum in Melbourne, he highlighted the extensive applications of AI technology, which could significantly enhance productivity across various sectors.
Arndt acknowledged the risks associated with inflated valuations in the AI space but emphasized that current investments are largely backed by earnings, stating, “I don’t think it’s a bubble – I think there’s a risk of a bubble.” He pointed out that the broad applicability of AI solutions makes it difficult to predict their ultimate impact.
According to UBS, global AI spending is projected to reach US$375 billion in 2023. The landscape includes nearly 500 AI “unicorns,” or companies valued at over US$1 billion, with 100 of these established since the beginning of 2023, as reported by CB Insights.
Arndt detailed the Future Fund’s substantial investments across the AI value chain, including data centers and energy solutions. Since its inception, the Future Fund has reported investment returns exceeding US$200 billion for the first time in September 2023. Established by the Australian government in 2006, the fund aims to address unfunded superannuation liabilities, although it does not disclose specific allocations to AI-related investments.
One potential application of AI discussed by Arndt involves its integration into the care economy, spanning healthcare, aged care, and childcare sectors. He believes that AI could enable human workers to increase efficiency, ultimately allowing fewer personnel to accomplish the same tasks.
Despite these optimistic projections, Dr. David Gruen, the Australian Statistician, pointed out during the same panel discussion that evidence of productivity growth driven by AI remains unclear. He noted that GDP per capita growth for the year ending June was only 0.2 percent, which he described as “sluggish.” Gruen expressed concern that significant technological changes have not translated into substantial productivity increases.
Data centers play a crucial role in supporting the AI-driven economy, providing the necessary computing power for complex data processing. In February 2023, the Future Fund increased its stake in data center developer CDC to 34.6 percent, marking its commitment to this sector.
In a speech delivered in June 2023, Greg Combet, chair of the Future Fund board, indicated that the organization believes AI advancements will occur more rapidly than many anticipate. He stated that investments in data centers, energy infrastructure, and renewable generation position the Future Fund favorably within the growing AI market.
The potential for generative AI to drive productivity growth has also been noted by Goldman Sachs, which estimates a possible increase of 15 percent in productivity with widespread adoption.
AI-related stocks have witnessed remarkable growth, exemplified by Nvidia, which became the first public company to achieve a market capitalization of US$5 trillion in recent months—an amount nearly double that of Australia’s entire share market.
Notable investor Michael Burry, known for his successful short position against subprime mortgages prior to the 2008 financial crisis, reportedly placed a US$1.1 billion bet against the stock prices of AI leaders Nvidia and Palantir Technologies last week.
As the Future Fund maintains a significant presence in global markets, it has benefited from the strong performance of technology stocks, particularly in the context of the ongoing AI hype. Combet’s June remarks also indicated that the United States is becoming a riskier investment destination, likely affecting its share of global capital flows due to increased market volatility.
The Future Fund’s strategic positioning in AI and related sectors reflects a broader confidence in the transformative potential of this technology, despite ongoing debates about its valuation and economic impact.
