I recently stumbled across a post where Larry Fink, the co-founder, chairman, and CEO of BlackRock, a leading investment group, stated that Americans would be funding the much-needed data centers to support AI growth.
By Cheryl Auger
That statement made me wonder: Where is my retirement money invested?
For those of us lucky enough to have retirement accounts, we know it can be a challenge to keep up with the markets. So many of us invest in funds. Funds are often picked based on what is available, past performance, or advice from friends.
That is basically how my portfolio came to be.
As I looked through my funds, I was surprised to see many of the same stocks—Apple, Google, Tesla, Nvidia, and others—among the top holdings, regardless of whether the fund was from Vanguard, Schwab, or some other financial services company.
That got me thinking.
If there is a technology bubble and it bursts, my retirement savings will be affected. When I looked more closely at some of the individual stocks, many had high price-to-earnings ratios, suggesting that the funds holding these stocks may be paying a very high price for those companies’ earnings.
For example, Tesla’s stock has averaged about 312 times its earnings over the last year. That seems like a significant risk to have across multiple funds.
After looking more closely at the funds available through my retirement provider, I was able to find a few decent-performing funds with little or no exposure to technology stocks. To be safe, I transferred my money into those funds.
But then I started thinking about Larry Fink’s comments.
Where Is Our Retirement Money Going?
How exactly does he expect Americans’ retirement accounts to help fuel the massive investment in AI and data centers?
Fund managers already invest our retirement money in thousands of companies. Most of us don’t have the time, knowledge, or ability to examine every stock held inside every fund we own. We look at the fund’s performance, fees, risk level, and perhaps its largest holdings, and then we trust the professionals to make the investment decisions.
And that raises an interesting question.
If the AI and data-center buildout requires trillions of dollars in investment, how much of that money could ultimately come from ordinary Americans’ retirement savings?
I’m not suggesting that fund managers are secretly taking our retirement money and writing checks to build data centers. That isn’t what I’m saying.
What I am saying is that our retirement accounts can own shares in the companies building the infrastructure, supplying the equipment, providing the power, or developing the technology behind the AI boom.
In full transparency, I only looked at the top holdings of my funds, which sometimes represented just 10% or 25% of the overall stocks held in the fund.
There are proposals for tolls or other revenue mechanisms that would require technology companies or users to help pay for data centers. But there does not appear to be much discussion about whether fund managers should be required to clearly inform investors when their retirement savings are being invested in companies involved in building data centers, AI infrastructure, or cryptocurrency.
Let’s Start Asking Questions
If Americans are going to be asked, directly or indirectly, to help finance the enormous investment required for AI and data centers, shouldn’t we know how much of our retirement savings is already invested in that ecosystem?
For those of us showing up at city council meetings to protest data centers, perhaps it’s also time to ask more questions about our 401(k)s.
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