In a disclosure to clients, Viking acknowledged that its hesitance to embrace AI stocks was a misstep as the sector soared in early 2026.
Viking's portfolio is heavily weighted toward consumer, financial, and industrial sectors, with AI-related positions comprising only about one-fifth of its total assets. Despite that small AI stake, Samsung Electronics Co. Ltd. emerged as the top performer in the second quarter; as a key semiconductor manufacturer, its chips are essential for AI systems.
Viking co-founder Andreas Halvorsen told investors in a recent communication: "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."
Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter
Halvorsen stated that several of Viking's top positions are "unjustly labeled 'AI losers'," as they trade well below the firm's estimated intrinsic value.
The AI-driven surge has been a defining market theme in 2026, propelling tech stocks to new highs. Viking's reluctance to chase these gains reflects its historically disciplined approach, which has protected it during previous market bubbles. The recent pullback in tech stocks may validate Halvorsen's caution, though the long-term trajectory of AI investment remains uncertain.
Other market participants became increasingly worried this week about the level of AI investment following Alphabet Inc.'s increase in capital expenditure plans. Thursday brought the worst single-day decline for the Magnificent Seven tech stocks since the April 2026 rout driven by tariffs.
The recent market turbulence may lend credence to Halvorsen's cautious stance. Alphabet's announcement of expanded spending on AI infrastructure has stoked fears among some investors that the industry is overinvesting. Whether this dip is a temporary setback or the start of a broader correction is unclear, but it highlights the very risks Viking has chosen to sidestep.
Thus far, Viking's clients appear supportive of the approach. The $26 billion hedge fund has a track record of wariness during strong rallies, notably skipping the 2020-2021 tech surge and thereby sidestepping the double-digit declines that rival funds experienced.
"I believe our discipline will produce compelling returns going forward," Halvorsen wrote, "as it has in past cycles."
Viking's historical caution has served it well during earlier periods of market excess, such as the dot-com bubble and the 2020 tech rally. In both cases, the firm avoided overvalued stocks and later outperformed when the hype faded. With the recent AI sell-off intensifying, Halvorsen's patience may again prove rewarding, though the sector's long-term trajectory remains uncertain.
Viking's cautious approach echoes its strategy during previous market peaks. The firm deliberately avoided the frenzied tech rally of 2020-2021, a move that insulated it from the subsequent downturn that hit many growth-oriented funds. With AI stocks now experiencing a pullback, Halvorsen's patience may again prove prudent. The $26 billion fund's long-term track record includes outperformance after earlier bubbles burst, suggesting that its disciplined valuation focus could yield future gains.
Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets
