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Australia’s biggest pension fund is stepping back from global stocks next year, and it is doing it with a straight face because the AI rush in the US market is finally flashing warning signs. John Normand, who runs investment strategy at the A$400bn AustralianSuper, said the fund is preparing to cut its exposure to public equities after watching valuations climb far beyond their historical lines. He also pointed to the sharp rise in leverage used to finance AI projects and the fast flow of fundraising through deals, venture rounds and public listings. Normand said the shift is coming because the AI cycle is reaching a late stage while the Federal Reserve is expected to start tightening in 2027, which he sees as a rough mix for stocks. He made these comments at a time when the Nasdaq Composite has climbed about 19 percent this year, following jumps of 43 percent and 29 percent in the last two years. Investors across the market have been whispering that the huge spending on AI may have pushed several tech names into levels that no one can call healthy. And Normand is not ignoring the numbers. Nvidia has doubled from its April low after President Donald Trump rolled out his “liberation day” tariff plan, and the stock is still up more than 30 percent for the year with a price-to-earnings ratio of 43. Alphabet has surged roughly 60 percent and trades around 30 times earnings. Watching the shift in global tech exposure Normand said the world’s major stock indices are now ruled by US names, especially Big Tech and AI names, with the Magnificent Seven alone making up around one-quarter of the MSCI World index. Inside AustralianSuper’s own book, international equities remain its biggest overweight position at 3 percentage points above its benchmark. But…

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Filed under: News - @ December 20, 2025 9:18 am