[DigitalToday intern reporter Seungah Yoo] Singapore sovereign wealth fund Temasek cited the possibility of a reversal in artificial intelligence (AI) investment flows as the biggest current market risk.

On Oct. 7 (local time), CNBC reported that Temasek Chief Investment Officer Rohit Sipahimalani (로힛 시파히말라니) said a pullback in AI investment flows could trigger a shock to markets. He made the remarks at the Milken Institute Asia Summit in Singapore.

Sipahimalani said he did not see the risk materialising immediately, but he forecast volatility could emerge in 2027. "I do not see it as imminent, but if you ask whether there could be a shock in 2027, there is a possibility," he said.

He said the recent strength in U.S. stocks has relied heavily on earnings momentum from AI-related companies. He cited improving results at AI and related companies as the reason the S&P 500 has stayed at record-high levels even as Treasury yields rose and borrowing costs increased.

He also pointed to widening disparities among stocks beneath the index strength. Sipahimalani said about half of Russell 3000 constituents were down more than 20 percent from their June peaks, and explained that the market's resilience depends heavily on a small number of stocks.

Regulation and profitability issues were cited as triggers that could cause AI investment flows to weaken. Sipahimalani said the flow could reverse if regulation tightens due to AI safety concerns or if signs emerge that corporate customers are not earning enough returns to match what they have spent on AI.

Temasek remains optimistic about the AI industry over the long term. It is continuing to expand AI investment and currently allocates about half of its AI exposure to listed assets. Sipahimalani said he would ideally like to raise that share to 70 to 75 percent.

That is a strategy to adjust investment positions quickly in line with the fast-changing AI industry. Listed assets are easier to trade and rebalance than private assets, allowing more flexibility in responding to market changes. "AI is an environment where the pace of change is very fast, so conditions can change easily, and you have to be able to pivot accordingly," he said.

Temasek also invests in private AI model developers such as OpenAI and Anthropic. Sipahimalani said the size of investments in those companies may be harder to adjust flexibly than in other areas.