The largest U.S. public pension fund has significantly reduced its holdings in the "Magnificent Seven" tech stocks, shifting to increase allocations to private equity.

According to a Financial Times report, CalPERS, the largest U.S. public pension fund (California Public Employees' Retirement System), is adjusting its asset allocation: cutting direct holdings of the "Magnificent Seven" tech giants while increasing exposure to private equity to reduce concentration risk in public equity investments. Calculations from regulatory filings show CalPERS will slash its direct holdings of stocks in Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla by 26% in the first half of 2026. The fund is instead diversifying its portfolio across hundreds of companies, cutting concentrated bets on a small number of top firms. Anton Orlich, CalPERS' deputy chief investment officer, confirmed this allocation shift in an interview. He noted that public equity market valuations are already elevated, and concentration in a handful of leading companies is pressuring relative returns. In contrast, private companies offer more attractive pricing, helping CalPERS buffer against potential downturns in public markets. This rebalancing took place ahead of the recent tech stock sell-off. This week, multiple tech giants released earnings reports, stoking market concerns over whether AI spending can translate into tangible returns. Microsoft, Amazon, and Alphabet are set to report results next week, leaving the tech sector facing further tests. As of June 30, CalPERS' assets under management reached $637.1 billion. Data released by the fund in July showed its preliminary net investment return for the past 12 months was 14.8%, with both public and private equity portfolios performing strongly.