CalPERS cuts Big Tech holdings 26% as it expands private equity exposure
The California Public Employees’ Retirement System reduced its holdings in the seven largest US tech stocks by 26% in the first half of 2026 while increasing allocations to private equity, venture capital, and growth equity.
The California Public Employees’ Retirement System (CalPERS) has cut its holdings in the seven largest US technology stocks by 26% while expanding its exposure to private equity. According to a report by the Financial Times, the $640bn pension fund reduced its combined direct shareholdings in Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla during the first half of 2026 as it seeks to diversify its portfolio amid concerns over elevated public market valuations.
CalPERS’ deputy chief investment officer, Anton Orlich, reportedly stated that the strategy would reduce concentration risk while providing exposure to private companies trading at more attractive valuations than their listed counterparts. Venture capital and growth equity have accounted for a disproportionate share of CalPERS’ new commitments since the pension fund overhauled its investment strategy in 2022.
The reallocation comes despite a period of private equity underperformance relative to listed equities. The S&P 500 generated a total return of approximately 65% over the three years to March 2026, compared with 24% for a US private equity index compiled by Cambridge Associates. Orlich reportedly argued that private equity valuations offered opportunities to generate returns while reducing exposure to a potential correction in listed technology stocks, pointing to strategic acquisitions as an alternative exit route for venture capital and growth equity investments amid a challenging IPO market.
However, the strategy has raised concerns regarding the valuations of privately held AI companies, including OpenAI and Anthropic, and whether venture capital investments offer sufficient diversification from the technology sector. Roger Vincent, founder of Summation Capital and former head of private equity at Cornell University’s endowment, reportedly questioned the rationale for increasing exposure to venture capital and growth equity amid rising valuations.
The move comes as investors reassess the sustainability of the AI-driven equity rally. Amid renewed concerns over technology companies' capital expenditure plans, the Nasdaq 100 fell 7.7% from its early October peak.