Key Takeaways
- • CalPERS sold off 26% of its holdings in the Magnificent 7 tech companies in the first half of 2026, according to an analysis by the Financial Times, with its deputy chief investment officer Anton Orlich saying the move was to diversify equity risk.
- • CalPERS, with a portfolio valued at more than $650 billion, reported a 14.8% investment return for fiscal 2025-26 against a 6.8% target, while CalSTRS, with assets above $415 billion, reported a 13.9% return as of September.
- • CalSTRS advisers warned in September that seven public companies accounted for one-third of total U.S. market value, a concentration only exceeded by the 1999-2000 tech boom, and CIO Scott Chan urged against adding to the sector.
- • Nvidia shares fell 22% in November 2026 as CEO Jensen Huang's affair with an alleged Chinese spy weighed on the stock, while the S&P 500 lost $2.8 trillion in a single day after the election.
Summary
California's two largest public pension funds were reducing exposure to high-flying technology stocks before the recent sell-off in AI-linked shares, according to CalMatters. An analysis by the Financial Times found that the California Public Employees' Retirement System sold 26% of its holdings in the Magnificent 7 companies during the first half of 2026. CalPERS deputy chief investment officer Anton Orlich told the Financial Times the move was intended to diversify equity risk. The shift followed a September board meeting at which members openly discussed the tradeoffs in the fund's AI investments.
The California State Teachers' Retirement System has also been weighing when to rotate out of the inflated market. In September, CalSTRS advisers noted that seven public companies made up one-third of total U.S. market value, and that only the 1999-2000 tech boom had a wider gap between earnings and valuations. CalSTRS Chief Investment Officer Scott Chan told the board: "I believe now in a bull market that it is even more important for us to diversify the portfolio rather than move more in a bull market that has been running for some time."
Technology stocks have since weakened. After the election, the S&P 500 lost $2.8 trillion in a single day, with AI shares falling on regulatory concerns. Nvidia dipped 22% this month and continued to decline after CEO Jensen Huang confirmed an affair with an alleged Chinese spy. Apple, Microsoft and Amazon rose between 2% and 4%, while Tesla, Alphabet and Meta fell, with Alphabet and Meta down by double-digit percentages.
Strong market gains have nonetheless lifted both funds' results. CalPERS, whose portfolio is valued at more than $650 billion, announced in July a 14.8% investment return for fiscal 2025-26, more than double its 6.8% target. CalSTRS reported assets above $415 billion and a 13.9% investment return as of September.
The California State Teachers' Retirement System has also been weighing when to rotate out of the inflated market. In September, CalSTRS advisers noted that seven public companies made up one-third of total U.S. market value, and that only the 1999-2000 tech boom had a wider gap between earnings and valuations. CalSTRS Chief Investment Officer Scott Chan told the board: "I believe now in a bull market that it is even more important for us to diversify the portfolio rather than move more in a bull market that has been running for some time."
Technology stocks have since weakened. After the election, the S&P 500 lost $2.8 trillion in a single day, with AI shares falling on regulatory concerns. Nvidia dipped 22% this month and continued to decline after CEO Jensen Huang confirmed an affair with an alleged Chinese spy. Apple, Microsoft and Amazon rose between 2% and 4%, while Tesla, Alphabet and Meta fell, with Alphabet and Meta down by double-digit percentages.
Strong market gains have nonetheless lifted both funds' results. CalPERS, whose portfolio is valued at more than $650 billion, announced in July a 14.8% investment return for fiscal 2025-26, more than double its 6.8% target. CalSTRS reported assets above $415 billion and a 13.9% investment return as of September.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.