CalPERS Cuts Magnificent Seven Holdings by 26%, Shifts Toward Private Equity as Tech Rally Wobbles
The nation's largest public pension fund has cut its direct holdings in the seven biggest U.S. technology stocks by 26 percent, the Financial Times reported, trading concentrated Big Tech exposure for stakes in hundreds of private companies as doubts grow about AI spending.
CalPERS, the largest U.S. public pension fund, has cut its direct holdings in the seven biggest U.S. technology stocks by 26 percent and is redirecting money into private equity, the Financial Times reported on October 23.
According to the FT’s analysis of regulatory filings, the California fund cut the combined number of shares it directly held in the “Magnificent Seven” companies, Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla, during the first half of 2026. Deputy chief investment officer Anton Orlich told the newspaper the fund was trading concentrated exposure to seven companies for investments in several hundred private businesses to spread equity risk.
Public stocks carry high valuations and are concentrated in a handful of companies that could underperform, Orlich said. Private businesses offer more attractive pricing and could provide some protection if public markets decline, he told the FT. The reported 26 percent reduction measures the combined number of shares CalPERS directly held, rather than the dollar value of those investments or its total technology exposure.
Why the move matters to other investors
CalPERS, the California Public Employees’ Retirement System, managed $637.1 billion in assets as of June 30, and reported a preliminary net investment return of 14.8 percent for the fiscal year ended that date, supported by performance in both public and private equity. As Dealroom noted, when a fund of that size trims its most crowded position, other large investors tend to take notice.
The move comes as investors reassess the technology companies that drove a four-year rally in U.S. equities. The sector has faced selling pressure this week as corporate earnings renewed questions about whether massive spending on artificial intelligence will generate sufficient returns. The Nasdaq fell 2.6 percent on October 22, its steepest drop since June.
For context on this week’s pullback, see how the Nasdaq suffered its worst day since June as AI spending doubts rattled tech stocks. Results from Microsoft, Amazon and Alphabet next week will further test investor confidence in that spending.
Private markets, public doubts
Not everyone is convinced the pivot reduces risk. Critics have questioned the valuations of privately held AI companies, including OpenAI and Anthropic, and whether venture capital exposure truly diversifies away from technology. The S&P 500 returned roughly 65 percent over the three years to March 2026, compared with 24 percent for a U.S. private equity index compiled by Cambridge Associates.
CalPERS has been overhauling its investment strategy since 2022, with venture capital and growth equity accounting for a disproportionate share of its new commitments. Orlich told the FT that strategic acquisitions offered an alternative exit route for those investments given a challenging market for public listings.
Reporting based on coverage by the Financial Times, as reported by CityBiz and Dealroom.
