One Of The World’s Biggest Money Managers Walks Away From Mag7

One Of The World’s Biggest Money Managers Walks Away From Mag7

Douglas A. McIntyre

Fri, September 4, 2026 at 7:35 PM GMT+3 4 min read

Quick Read

• PIMCO is dumping most Mag7 stocks, citing sky-high valuations and AI spending that burdens debt and clouds earnings outlooks.

• AI data center spending could hit $1 trillion next year, with opaque funding deals masking which tech giants carry the most financial risk.

• Corporations pulling back on AI due to unclear ROI, while cheaper Chinese-built AI products threaten to cripple OpenAI and Anthropic IPO prospects.

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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.

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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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