The California Public Employees' Retirement System (CalPERS) is reducing its holdings in major U.S. technology companies amid growing concerns about overvalued tech stocks and the sustainability of the artificial intelligence (AI) investment boom.

According to the Financial Times, CalPERS, which manages over $600 billion in assets, collectively cut its direct holdings in the "Magnificent Seven" tech stocks (including Apple, Microsoft, Google, Amazon, NVIDIA, Meta, and Tesla) by 26% in the first half of this year. The fund is shifting towards private equity investments to diversify risk and reduce reliance on a few stock market leaders. Anton Orlich, CalPERS' Deputy Chief Investment Officer, stated that public market equity valuations are too high, and tech giants may underperform.

This adjustment also echoes previous warnings from Elon Musk, who noted that funding for companies lacking substantial revenue beyond AI data centers has largely dried up, and predicted consolidation among "new cloud" providers. In pre-market trading on Monday, shares of "new cloud" companies such as CoreWeave, Cipher Digital, and IREN all declined.