Norway's $2.2T Sovereign Fund Models 'AI Correction' Crashing Nvidia, Broadcom—And The Results Are Brutal - Broadcom (NASDAQ:AVGO), NVIDIA (NASDAQ:NVDA)

Core Viewpoint - Norges Bank Investment Management (NBIM) has modeled a severe "AI correction" scenario, predicting a 53% decline in equities and a 35% drop in the fund's total value, while fixed income is expected to rise by 10% [1][2]. Group 1: NBIM's Modeling - In the "AI correction" scenario, the failure of the capex boom to yield real productivity gains leads to significant equity losses [2]. - The model indicates that central banks would respond by lowering yields, which would partially offset the equity losses with gains in fixed income [2]. - The concentration of the market makes the current AI scenario more detrimental, resulting in a larger equity decline [2]. Group 2: Market Implications - NBIM is the largest single stock owner globally, holding approximately 1.5% of all listed equities [3]. - Prediction markets, such as Polymarket, estimate an 18% risk of a major sector crash related to the "AI bubble burst" by December 31, 2026 [4]. - The Norwegian model suggests that in a tech-led deflationary crash, policy support would lower yields, making bonds a viable offset again, despite criticisms of the "60/40 portfolio" [5].