Norges Bank Investment Management (NBIM), which runs Norway's $2.2 trillion sovereign wealth fund, has modeled a brutal “AI correction” —and the stress test shows equities down 53%.

What NBIM Modeled

In the fund's “AI correction” scenario, where the capex boom fails to produce real productivity gains, the model shows equities plummeting by 53% and the fund’s total value dipping by 35%, while fixed income increases by 10%.

NBIM assumes central banks respond, pushing yields down.

NBIM says market concentration makes this year's AI scenario more punishing—a bigger equity hit, only partly offset by bonds.

The stakes are high because NBIM is the world's largest single stock owner, holding roughly 1.5% of all listed equities globally.

Prediction Markets Price The “Bust” Risk

On Polymarket, the contract for “AI bubble burst by…?” prices the risk of a major sector crash at roughly 18% by December 31, 2026.

Unlike vague sentiment surveys, the Polymarket contract has strict, definable triggers for a “burst”:

• NVIDIA Corp (NASDAQ:NVDA) dropping 50% from its all-time high.
• iShares Semiconductor ETF (NASDAQ:SOXX) dropping 40% from its all-time high.
• Major supply chain names like Broadcom Inc (NASDAQ:AVGO) or Taiwan Semiconductor (NYSE:TSM) dropping 50%.

Why It Matters: The Return of the Hedge

One of the most critical takeaways from the NBIM model for retail investors is the behavior of bonds.

While the “60/40 portfolio” has been criticized in recent years, the Norwegian model suggests that in a tech-led deflationary crash, policy support would push yields down, making bonds a functional offset again.

If the AI narrative cracks, index concentration poses a specific risk to Invesco QQQ Trust (NASDAQ:QQQ) and SPDR S&P 500 ETF Trust (NYSE:SPY).

The world’s largest stock owner is officially modeling a tail-risk scenario where AI fails to deliver and they see Treasuries like the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) as the only asset class modeled to post gains

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