From Tech to Therapeutics: Why a Major Teacher Pension Fund is Bets Big on Eli Lilly Over AI and EV Stocks

The Teacher Retirement System of Texas (TRS), the sixth-largest U.S. teacher pension fund with over $190 billion in assets, has quietly repositioned its portfolio in a bold move that underscores shifting investor sentiment toward tech stocks and healthcare. Over the past quarter, TRS slashed holdings in Apple (AAPL), Nvidia (NVDA), and Tesla (TSLA) by 8–12%, while increasing its stake in Eli Lilly (LLY) by 11%. This strategic pivot reflects a growing skepticism toward tech sector volatility and a renewed confidence in Eli Lilly’s dominance in diabetes and weight management therapies.

The Tech Sell-Off: A Response to Sector Headwinds

The tech sector’s struggles have been multifaceted. Nvidia, a linchpin of the AI boom, faced headwinds as cost-efficient alternatives like DeepSeek’s chatbot emerged, casting doubt on long-term AI capital expenditure plans. Meanwhile, Tesla’s stock tumbled amid declining vehicle demand and scrutiny over CEO Elon Musk’s political activities, including his controversial work on the Department of Government Efficiency (DOGE). Apple’s vulnerability to global trade policies and its reliance on manufacturing hubs in China and Vietnam also weighed on its valuation.

TRS’s decision to reduce exposure to these stocks aligns with broader market trends. The Nasdaq Composite, which includes many tech giants, fell 14% year-to-date as of May 2025, while the S&P 500 Health Care sector rose 8% over the same period.

Eli Lilly’s Surge: A Bet on Stable, High-Growth Pharma

Eli Lilly’s stock has surged 395% over the past five years, driven by its blockbuster GLP-1 drugs, including Mounjaro and Zepbound. These medications, which address diabetes and obesity, are now among the fastest-growing pharmaceuticals globally. In Q1 2025 alone, Mounjaro’s revenue jumped 113% year over year, while Zepbound sales skyrocketed 347%.

The fund’s increased stake in LLY also reflects confidence in its broader pipeline. Eli Lilly recently secured regulatory approvals for new oncology and immunology drugs and announced plans to build four manufacturing facilities to meet surging demand. The company reaffirmed its 2025 revenue guidance of $58 billion to $61 billion, with margins expected to remain between 40.5% and 42.5%.

The Strategic Shift: Stability Over Speculation

TRS’s moves highlight a broader shift toward defensive, cash-flow-driven investments in an era of economic uncertainty. While tech stocks remain volatile amid AI adoption questions and geopolitical tensions, Eli Lilly’s steady growth in a secular healthcare trend—aging populations and rising chronic disease rates—appeals to long-term investors.

Even skeptics might question why TRS prioritized LLY over other high-flying pharma stocks. Notably, the Motley Fool’s Stock Advisor team omitted LLY from its 2025 top 10 list, citing concerns over patent cliffs and regulatory risks. However, TRS’s decision may reflect a calculated bet on LLY’s ability to diversify beyond GLP-1 drugs and capitalize on its oncology pipeline.

Conclusion: A Fund’s Vote of Confidence in Healthcare’s Future

TRS’s portfolio reallocation underscores a pragmatic investment philosophy: prioritize companies with durable earnings and secular growth drivers over those exposed to speculative trends. With Eli Lilly’s revenue expected to hit $60 billion by year-end—a 45% increase from 2023—and its stock outperforming the S&P 500 by over 200% since 2020, the pension fund’s move appears well-founded.

While tech stocks like NVDA and TSLA face cyclical headwinds, LLY’s dominance in GLP-1 therapies and its expanding pipeline position it as a rare “win” in a market increasingly wary of volatility. For long-term investors, TRS’s strategy offers a blueprint: favor companies with sustainable cash flows and secular tailwinds over those riding fickle trends. In a world where AI hype and EV demand swings dominate headlines, Eli Lilly’s quiet ascent reminds us that some markets just keep growing—and growing steadily.