Calpers Reduces Holdings in Major Tech Stocks Amid AI Valuation Concerns

California's Pension Fund Reduces Stakes in Top Tech Giants

Calpers, the world’s fifth-largest pension fund, reduced its direct shareholdings in seven major U.S. technology companies by 26% during the first half of 2026. These companies, known as the Magnificent Seven, include Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla.

The fund, which manages more than $600 billion in assets, is moving away from these high-value stocks as investors begin to question the long-term payoff of massive spending on artificial intelligence (AI). This change comes as some tech valuations appear stretched compared to their actual earnings.

Major Reductions in Magnificent Seven Holdings

• Calpers cut its combined direct holdings in the seven largest tech stocks by 26% in early 2026.
• Apple has seen a 34% gain this year, while Nvidia is up 12%.
• Other members of the group, including Meta, Alphabet, and Tesla, have seen their stock prices fall this year.
• The Roundhill Magnificent Seven ETF, an investment fund that tracks these companies, is up 7% year-to-date.

Shift Toward Private Equity and Valuation Concerns

Calpers is increasing its investments in private equity, which involves buying stakes in companies that are not traded on public stock exchanges. The fund aims to spread its money across a wider variety of businesses to avoid relying too heavily on a few market leaders.

Deputy chief investment officer Anton Orlich stated that stock prices for the major technology giants look expensive. He suggested that these companies might not perform as well as other types of investments in the near future.

Pressure on AI Infrastructure and Neocloud Stocks

The market also saw a sell-off in neocloud companies, which are specialized providers of cloud computing services often used for AI. Stocks for companies like CoreWeave, Cipher Digital, and IREN dropped in pre-market trading on Monday.

This market activity followed a warning from Elon Musk, who noted that financing is becoming harder to find for companies that rely solely on AI data centers without other sources of revenue. Musk’s company, SpaceX, recently raised $40 billion in debt to purchase computer chips for AI calculations.

Sources

• CoinDesk