Calpers pulls back from big tech as AI jitters deepen neocloud sell-off
California’s pension fund shifts toward private equity as investors question tech valuations and the payoff from soaring AI spending.
Calpers, the world’s fifth-largest pension fund, is cutting its exposure to major U.S. technology companies as concerns mount over stretched valuations and the sustainability of the artificial intelligence investment boom, the Financial Times reported.
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. The group comprises Apple AAPL, Microsoft MSFT, Alphabet GOOG, Amazon AMZN, Nvidia NVDA, Meta Platforms META and Tesla TSLA.The Roundhill Magnificent Seven ETF (MGAS) is up 7% year to date, led by Apple’s 34% gain, followed by Nvidia’s 12% rise. Meta, Alphabet and Tesla are all down for the year.
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.
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 repositioning adds a further dimension to concerns highlighted by Elon Musk, whose SpaceX SPCX raised $40 billion in debt to buy GPUs for AI calculations. Musk warned that financing had largely dried up for companies lacking substantial revenue outside AI data centers, predicting consolidation among neocloud providers.
That pressure continued into Monday’s pre-market trading, with neoclouds such as CoreWeave (CRWV), Cipher Digital CIFR and IREN IREN all selling off.
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Asanat Analysis — Why it matters
Calpers' rotation away from mega-cap tech signals broader institutional skepticism about AI capex cycles and stretched valuations in the "Magnificent Seven" cohort. This macro pivot reflects a pattern seen periodically since 2022: when traditional asset managers lose conviction in the narrative driving tech equities, capital flows become volatile across correlated risk assets, including crypto.
The shift toward private equity suggests LPs are seeking illiquidity premiums and non-public valuations rather than public market repricing—a posture that typically precedes equity market consolidation phases. For crypto, this matters because institutional appetite for tech exposure (including blockchain infrastructure and AI tokens) often tracks equity market sentiment; a sustained public tech retreat can dampen venture capital deployment and weigh on growth narratives that justified recent on-chain valuations.
Historically, when pension funds de-risk from consensus trades (2018, 2022), bitcoin and ethereum often followed broader equity weakness but later decoupled as macro drivers shifted. The current pullback appears macro-driven rather than crypto-specific, suggesting this cycle's correlation risk remains active rather than resolved.