Nicolai Tangen sees concentrated risk in the AI stock boom and warns that we are heading for a period of low returns.
So could the AI mania, excessive and unrealistic enthusiasm for AI, be soon about to have a reality check? It was asked in a piece posted in July 2024.
Artificial Intelligence AI is an oxymoron, since if it is artificial it can not be real.
Moreover, if it is not real, then how practical is it in the real world?
Nicolai Tangen sees concentrated risk in the AI stock boom where real-life case studies of AI applications in business have failed to realise profits for the business.
Simulated machine intelligence in its most simplistic form is not much more than a state of being on and off, binary zeros and ones.


“Nicolai Tangen sees concentrated risk in the AI stock boom”
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So here is an AI reality check
Did you know that an AI Automated order-taking (AOT) system can’t even cut it to compete with human customer services?
In July, McDonald’s, the world’s largest fast-food chain, ended its two-year free trial of an IBM Automated order-taking (AOT) test and reverted to human customer service.
While there have been successes, we feel there is an opportunity to explore voice ordering solutions more broadly,” Mason Smoot, chief restaurant officer for McDonald’s USA, said in the system message. “After a thoughtful review, McDonald’s has decided to end our current partnership with IBM on AOT, and the technology will cease to be used in all restaurants currently testing it no later than July 26, 2024,” he wrote.
Automated order-taking (AOT) mess-ups are plentiful.

“After a thoughtful review, McDonald’s has decided to end our current partnership with IBM on AOT, and the technology will cease to be used in all restaurants currently testing it no later than July 26, 2024”
Mason Smoot, McDonald’s
Comical viral videos of wrong orders include
“Do you want bacon with your ice cream?”
Not so lucky for another customer whose ice cream was fused with bacon.
In another incident, AI technology added 166 GDP worth of chicken nuggets to another customer order.
For more amusement, social media TikTok has its fair share of automated order-taking (AOT) mess-ups.
Cursing a McDonald’s robot, a woman is trying to order Vanilla ice cream and a bottle of water from AI assistants and is given several icecreams, ketchup sachets and two portions of butter.
ChatGPT might produce gibberish marketing or be good at aggregating information, but has it written something avant-garde or game-changing?
Regarding using AI to replace human intelligence in a highly stressful life-and-death critical decision-making like in warfare, AI has led to crimes against humanity.
“The time of very low interest rates is gone. The world is a much more dangerous place” – Nicolai Tangen
AI has no consciousness, and it is either on or off. The dualism of human intelligence is that the brain, a physical object and the mind, a non-physical object, are distinct.
The mind provides a state of being and consciousness, and the state of being aware is a facade of human intelligence.
“I think therefore I am,” Descartes wrote.
Humans deciding whether to bomb a residence block to target a Hamas combatant ponder about civilian casualties. AI has no state of being, no consciousness and no conscience.
AI-assisted targeting in warfare led to a bad outcome
The International Criminal Court ICC has issued arrest warrants for the top brass and leaders.
AI has yet to prove its value in customer-automated order-taking or critical decision-making.
It might be wise to look behind the glossy marketing spin of AI and seek real case studies where the technology has added real value and profits for the business. Avoid being bamboozled with geeky science.
Peter Lynch: Don’t Invest in What You Don’t Understand
Nicolai Tangen sees concentrated risk in the AI stock boom, and the boss of Norway’s $2 trillion sovereign oil fund could be bang on the money
Nicolai Tangen, the CEO of Norges Bank Investment Management, said there was a new reality in the stock market amid geopolitical tensions and falling liquidity.
“The time of very low interest rates is gone. The world is a much more dangerous place,” Tangen told the Financial Times’ Unhedged podcast.
“In America, you have lots of AI and little regulation, and in Europe, you have little AI and lots of regulation” – Nicolai Tangen
The companies that have solidified their place at the top of that new reality are becoming a key risk area. Businesses that create or design AI semiconductor chips and those that use the tech for their burgeoning AI capabilities saw massive share price appreciation in the past couple of years.
He noted that the top of the market now comprised “companies with some kind of AI connection,” while the top 10 companies in the US S&P 500 accounted for around 20% of the index.
“The concentration is worrying. It means that there is a risk in the stock market which we have never seen before.”
Tangen described how the large-cap stocks were now heavily interlinked around the business of microchips. He cited Dutch giant ASML, “which makes the machines to make the chips,” before selling them to Taiwan. Many chips are then designed by Nvidia, before being sold to the likes of Amazon, Meta, and Microsoft.
“So there are very few companies tied into them, and they are getting bigger and bigger and more and more important.”
Despite Nicolai Tangen sees concentrated risk in AI stocks, Tangen’s $2 trillion oil fund is heavily invested in the companies he cited as key risk areas
Norges holds a more than 1% stake in the US’s biggest tech companies, including Microsoft, Apple, Nvidia, and Alphabet.The fund also holds a sizable stake in Taiwan Semiconductor Manufacturing Co.
Collectively, Norges owns $196 billion worth of shares in Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, TSMC, and ASML.
Tangen said heavy AI regulation in Europe meant it was likely that the big tech players would continue to be American.
“We have hardly any large tech companies in Europe; we are far behind. Will we manage to catch up? I would be surprised if we did.
“In America, you have lots of AI and little regulation, and in Europe, you have little AI and lots of regulation,” he said.