CalPERS cuts Magnificent Seven holdings as technology stocks come under pressure
Key Facts
California public pension fund CalPERS has reduced its holdings in the Magnificent Seven technology companies, according to the Financial Times, as the sector's stocks face pressure linked to artificial intelligence. In the Thursday session before the report was published, the Nasdaq Composite closed down 2.6% at 26,008.86 points, according to Investing.com, amid pressure on technology and AI stocks. Deutsche Bank strategists had turned more cautious on the technology sector earlier in the month. Reuters quoted them on October 9, 2026, as saying the rotation into technology stocks had "come a long way, and the risk-reward balance no longer looks favorable in the near term." The strategists thus specified the near term as the time frame for their assessment of the sector's risks and returns. The Nasdaq's decline in Thursday's session followed that assessment, as pressure on AI-related stocks continued.
On the fund's performance, CalPERS reported a preliminary investment return of 14.8% for fiscal year 2025-26, according to its official bulletin. Its return for fiscal year 2024-25 was 11.6%, compared with 9.3% for fiscal year 2023-24, according to the same bulletin. The reported return thus rose in each of those fiscal years compared with the previous year, culminating in the latest preliminary result. Alongside those results, the fund said it had kept its discount rate at 6.8% for 5 years after lowering it from 7.5%. It added in its bulletin: "CalPERS has maintained its discount rate of 6.8% for 5 years after lowering it from 7.5%." The discount rate remained unchanged over the period cited by the fund, while reported investment returns for fiscal years 2023-24, 2024-25 and 2025-26 exceeded it.
Against a backdrop of concerns over pension investments in AI, Britain's Pensions Regulator published guidance on concentration risks on October 22, 2026. The regulator warned that the spread of AI exposure across sectors could cause losses to emerge simultaneously in different parts of investment portfolios. It said "losses could emerge simultaneously across seemingly unrelated holdings and asset classes." The warning thus extends to holdings that may appear separate but are linked by AI exposure across different sectors. The regulator recommended that pension trustees assess direct and indirect exposure to these investments across their entire portfolios. Its recommendations included testing for a sharp decline in AI-related assets, urging trustees to "test a severe but plausible downturn in the market for AI-related assets." These recommendations combine a review of exposures within portfolios with testing the impact of a market downturn on technology-related investments.