Calpers cuts Magnificent Seven holdings as AI spending doubts mount

World's fifth-largest pension fund reduces tech stock exposure by 26%, shifts to private equity

By LineZotpaper AI staff

Published26 October 2026

Read Time2 min

Illustration: Calpers cuts Magnificent Seven holdings as AI spending doubts mount

California’s public pension fund Calpers reduced its combined direct shareholdings in the Magnificent Seven technology stocks by 26% in the first half of 2026, the Financial Times reported, as concerns over stretched valuations and the payoff from surging AI investment fuel a broader repositioning toward private equity. The move came alongside a warning from Elon Musk that financing for AI data centre companies has largely dried up, triggering a pre-market sell-off in neocloud providers CoreWeave, Cipher Digital and IREN.

Calpers, which manages more than $600 billion, cut its direct holdings in Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla during the first six months of 2026, according to FT calculations based on regulatory filings. The fund is increasing its exposure to private equity, seeking to spread investments across a broader range of companies and reduce dependence on a handful of stock market leaders.

Deputy Chief Investment Officer Anton Orlich told the FT that public equity valuations looked expensive and that the technology giants could underperform other investments.

The Roundhill Magnificent Seven ETF (MGAS) is up 7% year to date, led by Apple’s 34% gain and Nvidia’s 12% rise, while Meta, Alphabet and Tesla are all down for the year.

Separately, Elon Musk warned that financing has largely dried up for companies lacking substantial revenue outside AI data centers, predicting consolidation among neocloud providers. His SpaceX raised $40 billion in debt to buy GPUs for AI calculations. The warning intensified Monday’s pre-market selling, with CoreWeave, Cipher Digital and IREN all falling.

The repositioning by Calpers adds a further dimension to growing investor unease about the sustainability of the AI investment boom.

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Analysis

Why This Matters

Calpers is a bellwether institutional investor; its shift signals widening skepticism about whether the massive capital spending on AI hardware will deliver expected returns.
A sustained pullback by large funds could pressure tech stock valuations and slow the flow of cheap capital to AI infrastructure companies.
The combination of pension-fund caution and Musk’s financing warning raises the risk of consolidation among smaller neocloud providers.

Background

Calpers is the fifth-largest pension fund globally, with more than $600 billion in assets. The Magnificent Seven stocks, Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla, have dominated market returns in recent years, fueled by enthusiasm for artificial intelligence. However, questions about the profitability of AI investments have grown as spending on chips and data centers rises.

Key Perspectives

Calpers (Deputy CIO Anton Orlich): told the Financial Times that public equity valuations look expensive and that the technology giants could underperform other investments, prompting the fund to rotate into private equity. Elon Musk, CEO of SpaceX: warned that financing for AI data-center companies lacking substantial revenue outside the sector has largely dried up, predicting consolidation among neocloud providers.

What to Watch

The Federal Reserve’s interest-rate decision this week and tech earnings reports, which could further influence market sentiment on AI spending.
Whether other large institutional investors follow Calpers’ lead in reducing tech exposure.
Signs of distress or mergers among neocloud companies if financing remains tight.

Sources

Calpers pulls back from big tech as AI jitters deepen neocloud sell-off · CoinDesk

Checked

12 claims in this story checked against 1 source: 9 supported.

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SupportedCalpers cuts Magnificent Seven holdings as doubts about AI spending mount.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Calpers reduced its combined direct shareholdings in the Magnificent Seven tech stocks by 26% in the first half of 2026, the FT reported.”
Partly supportedCalpers reduced its technology-stock exposure by 26%.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “The fund, which manages more than $600 billion, reduced the combined number of shares it directly held in the so-called Magnificent Seven tech stocks by 26% during the first half, according to FT calculations based on regulatory filings.”
SupportedFT calculations based on regulatory filings put the reduction in Calpers’ combined direct Magnificent Seven shareholdings at 26% in the first half of 2026.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “The fund, which manages more than $600 billion, reduced the combined number of shares it directly held in the so-called Magnificent Seven tech stocks by 26% during the first half, according to FT calculations based on regulatory filings.”
Partly supportedConcerns about valuations and AI investment payoffs fuel Calpers’ repositioning toward private equity.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Calpers is increasing its exposure to private equity, seeking to spread its investments across a broader range of companies and reduce its dependence on a handful of stock market leaders.”
SupportedCalpers is the world’s fifth-largest pension fund.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Calpers, the world’s fifth-largest pension fund, is cutting its exposure to major U.S. technology companies”
SupportedCalpers manages more than $600 billion.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “The fund, which manages more than $600 billion, reduced the combined number of shares it directly held”
SupportedCalpers is increasing private-equity exposure to diversify its investments and reduce dependence on a handful of stock-market leaders.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Calpers is increasing its exposure to private equity, seeking to spread its investments across a broader range of companies and reduce its dependence on a handful of stock market leaders.”
SupportedAnton Orlich told the FT that public-equity valuations looked expensive and technology giants could underperform other investments.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Deputy chief investment officer Anton Orlich told the FT that public equity valuations looked expensive and that the technology giants could underperform other investments.”
SupportedThe Roundhill Magnificent Seven ETF is up 7% year to date.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “The Roundhill Magnificent Seven ETF (MGAS) is up 7% year to date, led by Apple’s 34% gain, followed by Nvidia’s 12% rise.”
SupportedMusk warned that financing had largely dried up for companies lacking substantial revenue outside AI data centers.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “Musk warned that financing had largely dried up for companies lacking substantial revenue outside AI data centers, predicting consolidation among neocloud providers.”
Partly supportedMusk’s warning triggered or intensified Monday’s pre-market sell-off in CoreWeave, Cipher Digital and IREN.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “CoreWeave, Cipher Digital and IREN fell in Monday’s pre-market trading after Elon Musk warned of tightening financing for AI data center companies.”
SupportedSpaceX raised $40 billion in debt to buy GPUs for AI calculations.CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data: “whose SpaceX SPCX raised $40 billion in debt to buy GPUs for AI calculations.”