Dutch financial institutions invest heavily in volatile tech stocks

This finding comes from an analysis by De Nederlandsche Bank (DNB). In recent years, tech firms have grown enormously, partly driven by the rise of AI. The seven largest US tech firms – Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA and Tesla –  represent a huge market capitalisation, accounting for 24% of the MSCI World Index, a benchmark for equities that includes many large companies. Stocks of these “Magnificent Seven” are also popular among Dutch financial institutions, which together have invested nearly €95 billion in these seven firms.

Pension funds hold a large share of tech stocks

DNB’s analysis shows that pension funds in particular have substantial exposures to tech shares. By 31 July 2025, they had invested over €150 billion in technology stocks. This represents almost 43% of their listed equity portfolio (see Figure 1) and 8% of their total assets. Compared with January 2020, this is an increase of nearly 50%. The weight of the seven major US tech firms in their equity portfolios has grown even more sharply: from 7% in January 2020 to 19% in July 2025. Differences between individual pension funds, however, are significant.

Investment funds allocate 30% of their total equity portfolio to tech stocks, equal to 6% of their total assets.

Tech investments also rising among insurers

Although insurers’ exposure to tech firms is lower than that of pension funds, it remains substantial. Tech stocks account for 33% of their total equity portfolio, which is nearly 2% of their total assets. The weight of tech firms in insurers’ equity portfolios has also increased in recent years. They too have a significant concentration in stocks of the seven major US tech firms: 13% of their total equity portfolio, up from just 6% in 2020.

Not just high returns, but high volatility too

Tech stocks are known for their high returns and volatility compared with stocks from other sectors. Prices of technology stocks fluctuate more than most other equities. Nevertheless, they tend to rise more strongly on average. This growth is largely driven by the rapid expansion of the seven major US tech firms. After a sharper decline earlier this year, US tech stock prices have once again outperformed the broader market, climbing 20% compared with a 16% rise in the overall equity index.

Growing concerns

Warnings about the high valuations of tech stocks and the risk of a sudden correction are becoming more frequent. The value of tech stocks depends heavily on uncertain future profits, and there are growing doubts about whether these will materialise. Stock prices can also be strongly influenced by monetary policy interest rates. In addition, tech stocks are highly sensitive to factors such as geopolitical fragmentation, innovation, new regulation and antitrust cases.

Concerns are voiced not only by DNB and other supervisory authorities, but also within financial markets, where there is unease about the big tech firms investing too heavily in AI. There are also worries about the increasing financial interconnectedness within the AI ecosystem, which could allow problems at one firm to spread easily to others.

Risks for financial institutions

The large and growing weight of a limited number of tech stocks in the portfolios of financial institutions exposes them to risks. If tech stock prices were to fall abruptly, financial institutions could incur major losses. Moreover, the high concentration in the seven largest US tech firms makes them vulnerable to price corrections in just a few firms. It is therefore essential for financial institutions to keep their exposure to tech stocks within their defined risk appetite. This remains just as important even after the sharp rise in tech share prices.