One Of The World’s Biggest Money Managers Walks Away From Mag7
One of the world's largest money managers just made a dramatic bet against America's most powerful tech companies, and the reasoning behind the move raises uncomfortable questions about whether AI spending is a trillion-dollar trap.
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PIMCO managed $2.33 trillion in total assets as of June 2026. That makes it the world’s 14th-largest money manager. Recently, it signaled that based on current valuations, it was moving out of most Mag7 stocks. It is moving into Asia electronics suppliers, Chinese financial companies, and healthcare. In a Bloomberg report on this realignment, it wrote, “The fund is underweight US Big Tech firms due to their high valuations and soaring AI spending, which drives up debt burdens and clouds their earnings outlook.”
This should come as no surprise. Concerns about AI data center spending have turned into near panic among some investors. America’s large tech companies have not only emptied their balance sheets of cash. They have started partnerships with the world’s largest financial companies to feed what could have a total $1 trillion price tag for AI data centers next year. And the number is likely to rise over the rest of the decade.
It will not take much of a slip in AI demand to make the financial engineering to fund data centers look shakier than it is. Funding deals can be opaque. That means investors don’t have an easy way to see the financial dynamics or which companies are taking on the most financial risk.
Another huge risk is whether AI investments will turn into money. Some large corporations are pulling back investments in AI products because they cannot see a return on investment. If they can prove they made the right decision, many companies will follow their lead to reduce AI price risk.
There is also, in absolute dollar terms, what companies have to pay to weave AI into their operations. China-built AI products appear to be much less expensive than those built by US companies, some of which, including OpenAI and Anthropic, are private. If AI enterprise spending pulls back, these two companies’ IPOs could be crippled.
Big money, like PIMCO, is often known as smart money. If PIMCO is right, many Mag7 investors will get burned.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
