Capital Group Cos. is shuffling stakes in U.S. technology names amid the blowout rally in the Magnificent Seven megacaps.

The $2.5 trillion manager trimmed holdings in stocks whose outperformance had markings of a “gentle bubble,” and raised stakes in some large semiconductor companies beyond the chip-making darling Nvidia Corp., Andy Budden, investment director for equities said at a briefing in Singapore.

The rejigging underscores how investors are increasingly questioning whether the cohort—comprised of Apple Inc., Microsoft Corp., Nvidia, Alphabet Inc., Inc., Meta Platforms Inc. and Tesla Inc.—can repeat last year’s performance, when an index of the seven stocks more than doubled versus the S&P 500’s 24% gain.

When “you look at all these other exciting industries where really important things are happening, both in the U.S. and especially outside the U.S., you can say that for an active investor valuations are actually quiet attractive” in other parts of the market, Budden said.

Bedden’s view echoes some of his peers’. Some hedge funds have cut exposure to the Magnificent Seven group in the fourth quarter citing signs of extremes, while Cathie Wood’s exchange-traded funds have been paring exposure to Nvidia over many quarters. Bank of America Corp. strategists, including Michael Hartnett, argued in mid-February that a number of similarities between tech stocks now and previous bubbles suggest the Magnificent Seven is approaching—but not yet at—levels that may lead it to pop.

Capital Group has been selling its stake in Tesla for five straight quarters, while raising holdings in Microsoft, Meta and Taiwan Semiconductor Manufacturing Co.—which has a listing in the U.S.—over two quarters through December, according to data compiled by Bloomberg.

This article was provided by Bloomberg News.