SOFAZ interest in shares of global IT companies stems from boom in AI

By Azernews

Qabil Ashirov

Azerbaijan's State Oil Fund revealed the shares that it had invested. The Fund said that, as of October 1, 2023, they had invested in shares of over 1,600 companies with 14 foreign exchanges in 26 countries in the world.

The value of the listed shares of the Fund for the first nine months of 2023 is $10.3bn, which is 3.7 percent less than in the first half of 2023. In the first six months of 2023, this figure, according to the Fund, is expected to be $10.7bn was a dollar.

The Fund said that IT companies rank in the top 5 in the portfolio. However, there is also a change in the stock portfolio of the top 5 companies. Although the fund's investments in Apple Inc. increased by 2.3 times in the first half of this year and reached $497m, however, at the end of the 3rd quarter this figure decreased by 11.5 percent and amounted to $440m. In other words, the share of Apple Inc. in the stock portfolio of SOFAZ decreased from 4.7 percent to 4.3 percent.

As for Microsoft, the value of the fund's investments decreased from $390m to $364m. Its share in the stock portfolio decreased from 3.7 percent to 3.5 percent.

On the contrary, the value of investments made to Google increased by 9 percent and amounted to $241m. Its share in the portfolio increased from 2.1 percent to 2.3 percent.

SOFAZ's investments in Amazon in the last three months amounted to $191m, decreasing from $195m. Also, the share of "Amazon" in the stock portfolio of the Fund was 1.9 percent.

NVIDIA ranked among the top 5 companies of SOFAZ first time. The value of the fund's shares in the company increased from $169 million to $175 million. Headquartering in California, NVIDIA is an American multinational technology company and it is considered the dominant supplier of artificial intelligence (AI) hardware and software. It designs graphics processing units (GPUs), application programming interfaces (APIs) for data science and high-performance computing as well as system-on-a-chip units for the mobile computing and automotive market.

In general, SOFAZ's investments in shares of the top 5 IT giants amount to $1.4bn.

In a comment for Azernews on the investment to IT companies by SOFAZ, economist Natig Jafarly said that for a long time, the Azerbaijan Oil Fund has had a very conservative approach to investments. It invests in securities with low returns, but extremely reliable, and the investment strategy has been successful for a long time. He pointed out that due to this approach, there are no serious losses in SOFAZ's investments except for exchange rate fluctuations.

“Such a conservative approach aims to protect investments and it is understandable because this is not a private investment fund, it is a state fund, and it is necessary to be more sensitive with state funds,” Natig Jafarly said.

As for preferring global IT companies, the economist called it a successful strategy. He underscored that the prices of shares of IT companies have soared recently. He links this growth to artificial intelligence.

“SOFAZ's recent investment in IT companies is the right strategy, and stocks of major IT companies have returned around 43 percent through 2023. So this is a very serious indicator. The main reason for this is the artificial intelligence boom. This year we've seen the first steps in the widespread adoption of artificial intelligence, and all the IT companies that are developing concepts for the wider use of artificial intelligence have seen their shares rise. There is an expectation that by 2030, these IT companies will be able to produce and distribute various programs for artificial intelligence to take more place in human life, which will bring quite serious income to those companies. Probably, the consultants dealing with the investment strategy of SOFAZ have advised SOFAZ in this direction so that IT companies can benefit more from this artificial intelligence boom. Therefore, I think that investing in IT companies is the right strategy,” the expert added.