California’s pension giant is reducing its investments in leading technology stocks and increasing its private equity allocation as questions grow over expensive valuations and the long-term returns from the AI spending surge.
CalPERS, the world’s fifth-largest pension fund, has scaled back its exposure to major U.S. technology companies as investors reassess the strength of the artificial intelligence boom, according to a report from the Financial Times.
The fund, which manages more than $600 billion, lowered its combined direct holdings in the Magnificent Seven stocks by 26% during the first half of the year, based on the FT’s analysis of regulatory disclosures. The group includes Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla.
Performance across the group has been uneven. The Roundhill Magnificent Seven ETF (MGAS) has advanced 7% year to date, supported by Apple’s 34% gain and Nvidia’s 12% rise. Meta, Alphabet and Tesla, however, remain in negative territory for the year.
Rather than concentrating its portfolio around a small number of dominant technology companies, CalPERS is putting more money into private equity. The move is intended to diversify its investments across a wider selection of businesses and reduce reliance on major stock-market names.
Deputy chief investment officer Anton Orlich told the Financial Times that public-market valuations appeared expensive. He also warned that technology leaders could lag behind other investments.
The shift comes as doubts intensify over the financing model supporting AI infrastructure companies. SpaceX, led by Elon Musk, raised $40 billion in debt to purchase GPUs for AI computing. Musk has cautioned that companies without meaningful revenue beyond AI data centers are finding it increasingly difficult to secure financing, potentially setting the stage for consolidation among neocloud providers.
Those concerns were reflected in Monday’s premarket trading, when shares of neocloud companies such as CoreWeave, Cipher Digital and IREN came under renewed selling pressure.
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