America's biggest public pensions got more than half their stock gains from AI
Thirteen large funds made about $138 billion on AI stocks, leaving retirement savings tied to a boom that some politicians push back on.
WSJ What's News · AI Rout Finds a Floor. For Now.More than half of recent stock gains for America's biggest public pensions came from AI bets.
Thirteen big public pension funds earned roughly $138 billion on shares tied to artificial intelligence from late 2022 through June, and those companies accounted for 57% of their stock market profits during the last four years.
Finance reporter Joe Wallace, who examined the funds, said, "So the portion of the stock holdings allocated to these AI related stocks has more than doubled in under four years." For those 13 funds, almost a third of domestic share investments are in AI related companies.
The run has helped lift the funds to funding levels they have not enjoyed in years.
Politicians push back on AI projects while pension gains rest on AI stocks continuing to rise. In states including New York and Pennsylvania, politicians have challenged AI buildouts including data centers.
Questions people ask
What is a public pension fund?
It is a retirement plan run by a state or local government for its employees, such as teachers, police officers, and firefighters. Workers and their employers pay in during their careers, and the fund invests that money to pay monthly checks in retirement. When investments do well, taxpayers generally have to contribute less to keep the promises funded.
Why would pension funds end up with so much in AI stocks?
Most large pensions own broad baskets of U.S. stocks, so when a few large companies grow very fast, they automatically become a bigger share of the portfolio. AI linked companies have grown so much since 2022 that their weight has grown sharply without managers necessarily choosing to bet heavily. That is how AI companies came to make up a large share of domestic stock investments for these funds.
What happens to pensions if AI stocks fall?
A sharp drop would reduce the value of fund assets and lower their funding levels, which measure assets against promised future benefits. Funds would not run out of money immediately because they hold bonds and other assets and pay benefits over decades. But sustained losses can force governments, and sometimes workers, to contribute more to close the gap.