Viking Calls AI Underweighting a Missed Opportunity, Holds Course
Viking Global Investors has told clients that its cautious stance on AI-linked stocks was a missed opportunity, after its flagship hedge fund returned 2.6% in the first half while several rivals with greater exposure posted far stronger gains. But co-founder Andreas Halvorsen said the firm will maintain its discipline, arguing that current valuations offer too little margin of safety against its revenue and earnings forecasts. Bloomberg News’s Hema Parmar reports that Viking is participating selectively, including through Samsung, rather than following peers wholesale into the AI rally.
Viking accepts the cost of staying underweight the AI rally
Viking Global Investors has told clients that its conservative position in AI-linked stocks was a “missed opportunity.” Its flagship hedge fund gained 2.6% in the first half of the year, while the rival funds in Bloomberg News’s comparison posted substantially higher returns: Tiger returned 15.1%, Coatue 24.5%, and Lone Pine 43%.
| Fund | First-half return |
|---|---|
| Viking | 2.6% |
| Tiger | 15.1% |
| Coatue | 24.5% |
| Lone Pine | 43% |
Hema Parmar described Viking, which manages $56 billion, as taking a divergent position from peers that have embraced the “AI beta market.”
They’re taking a divergent view from what we’re seeing from many of their peers that are really jumping on this AI beta market.
The firm’s second-quarter performance was stronger than its first-half position suggests in isolation: the hedge fund gained about 7.5% in the quarter. But it still lagged most of Viking’s other investment vehicles. The long-only fund returned 16.5%; global hybrid private equity, 13.5%; and global drawdown private equity, 18%. Structured capital returned 5.2%.
| Viking vehicle | Second-quarter return |
|---|---|
| Hedge fund | 7.5% |
| Long-only fund | 16.5% |
| Global hybrid private equity | 13.5% |
| Global drawdown private equity | 18% |
| Structured capital | 5.2% |
Viking is not wholly absent from AI investments. Parmar identified Samsung as a holding that has worked out well for the firm. The divide is over how far to follow the stocks most visibly driving the rally—and at what prices.
Viking sees little margin of safety at current valuations
Viking’s position rests on its concern that the market’s most popular stocks could be vulnerable to a correction or sudden shock that curbs buying. The firm is also wary of the valuations attached to those shares.
Andreas Halvorsen, Viking’s co-founder, wrote to clients this month: “Against the current market backdrop, we continue to exercise caution when buying stocks at valuations that, considering our forecast of revenue and earnings, offer little margin of safety.”
The portfolio’s Samsung holding shows that Viking is willing to participate selectively in AI-related investments. But much of the firm’s portfolio sits in consumer, financial and industrial companies, and some of those positions have not performed as Viking hoped. The firm has told investors that certain holdings may be unfairly treated as “AI losers.”
Viking believes prevailing prices in the most popular stocks offer insufficient margin of safety relative to its own revenue and earnings forecasts. That judgment—not a complete rejection of AI investments—is why it has not followed peers more aggressively into the rally.
Past protection is the basis for Viking’s present restraint
Hema Parmar said Viking has historically delivered strong performance. In her account, the firm’s cautious posture in 2020 and 2021 helped it avoid much of the trouble that hit peers in 2022, when technology stocks and private-company valuations fell.
That history gives the firm a concrete reason to tolerate being out of step with an advancing market. Viking’s view is that the discipline that limited its exposure before the earlier reversal could again matter if highly valued stocks face the correction or sudden shock it fears.
The unresolved question is whether today’s AI valuations will ultimately justify the revenue and earnings expectations embedded in them—or whether Viking’s refusal to accept what it sees as inadequate protection will prove prescient again.