<div id="readability-page-1">With the second quarter of 2025 now over a month old, many investment funds will soon begin disclosing what stocks they held at the end of the first quarter, essentially providing investors a glimpse of what they bought and sold. It's a particularly interesting time to see how large institutional funds invested early in the year, given all of the volatility. First-quarter filings won't show what the market did in April, following President Donald Trump's &#34;Liberation Day&#34; announcement on April 2. But they offer an important glimpse of how investors were approaching tariffs, as well as high valuations in the broader market, particularly for the artificial intelligence (AI) giants. Another thing happened in the first quarter with a major institutional shareholder. The Teacher Retirement System of Texas (TRS) -- the sixth-largest pension fund for teachers in the U.S. -- cut its stake in Nvidia (NVDA 0.28%), Tesla (TSLA 3.31%), and Apple (AAPL 0.63%). But it piled into a popular pharmaceutical stock that's up 419% over the last five years. <h2>Selling big tech and AI</h2> While we don't know when the TRS fund sold during the quarter, we do know that the fund cut its stake in several of its largest holdings, some of the most popular stocks in the market: <ul> <li>Its stake in Apple: cut by 12%</li> <li>Its stake in Nvidia: cut by 9%</li> <li>Its stake in Tesla: cut by 8%</li> </ul> It's not clear whether the portfolio managers were cutting the fund's tech exposure across the board, or specifically targeting these names. But they seemed to have made a timely call, given what happened to these three stocks in the first quarter of the year: <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/9c0dd08f5ee5bd8e986ff0f3834e636f.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="473" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/9c0dd08f5ee5bd8e986ff0f3834e636f.png"/> TSLA data by YCharts. Nvidia and many other AI stocks ran into trouble earlier this year when the Chinese tech company DeepSeek managed to build a chatbot rivaling OpenAI's ChatGPT, reportedly using less advanced chips and spending much less than OpenAI. There's still much debate over the level of resources that went into DeepSeek's model, but investors nevertheless began to question overall AI demand as well as massive capital expenditure plans by the hyperscalers driving AI. Tesla faltered as CEO Elon Musk got more involved in politics, specifically with his work on the initiative known as the Department of Government Efficiency (DOGE). Reports of falling demand for Tesla vehicles globally made analysts question whether Musk's outspokenness had hurt the brand. Furthermore, given Tesla's high valuation, the company needs to execute on future initiatives, including autonomous driving and robotics. Apple shares fell the least among these three in the first quarter, but perhaps investors should have been more concerned, given how much manufacturing the consumer tech giant does in China and Vietnam. Shares fell hard after April 2 but rebounded following Trump's 90-day pause on higher tariff rates. The Trump administration has temporarily exempted consumer electronics made in China from tariffs, although any renewal of those would not work in Apple's favor. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTcxOTAvYm9hcmRyb29tLTEuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="461" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MTcxOTAvYm9hcmRyb29tLTEuanBnJnc9NzAw"/>Image source: Getty Images. </div> <h2>Piling into this classic pharma play</h2> While TRS cut a number of its top positions, it also increased its stake in the pharmaceutical giant Eli Lilly (LLY -3.19%) by 11% in the quarter. Lilly, which first went public in 1951, has risen 395% (as of May 6) over the last five years, rivaling the strong performances of many tech and AI stocks. Well-known as the first company to commercialize insulin, Eli Lilly has performed well in recent years. This is largely due to the performance of its GLP-1 drugs, which help people looking to manage diabetes type 2 and to lose weight. One of Eli Lilly's premier drugs, Mounjaro, which helps people with type 2 diabetes manage their blood sugar, had its revenue rocket 113% higher year over year in the first quarter of 2025. Zepbound, a drug that helps people manage their appetites and ultimately eat less, increased its sales 347% year over year. The company also continues to make progress in new drug development. CEO David Ricks noted in an earnings statement that Lilly received regulatory approval for several oncology and immunology drugs, and continues to see success in later-stage studies for its drugs related to diabetes and obesity. It's investing further in development and planning to construct four new manufacturing facilities. Management also reaffirmed its full-year revenue guidance of $58 billion to $61 billion of revenue, and expects a performance margin in the range of 40.5% to 42.5%. While tech has dominated the investing landscape for several years, it's always a good idea for investors to buy stocks in a variety of sectors to add diversity to their portfolios. Eli Lilly is a rare large-cap and stable pharmaceutical stock, whose returns have rivaled those of even some of the most headline-grabbing AI innovators. </div>

The Teacher Retirement System of Texas, the sixth-largest U.S. teacher pension fund, reduced its stakes in Nvidia, Tesla, and Apple while increasing its investment in Eli Lilly by 11%. This shift comes amid market volatility and concerns over AI demand and Tesla's performance. Eli Lilly has seen a 395% rise over five years, driven by successful diabetes and weight management drugs. The company continues to invest in drug development and anticipates revenue between $58 billion and $61 billion for the year, highlighting the importance of sector diversity in investment portfolios.

- Investment funds will soon disclose their first-quarter stock holdings, providing insights into their strategies amid market volatility.  
- The Teacher Retirement System of Texas reduced its stakes in major tech stocks like Nvidia, Tesla, and Apple while increasing its investment in Eli Lilly, a pharmaceutical company that has seen significant growth.  
- Eli Lilly's strong performance is attributed to its successful diabetes and weight management drugs, alongside ongoing drug development and a positive revenue outlook.

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One of the Largest Teacher Pension Funds in the U.S. Sold Nvidia, Tesla, and Apple and Piled Into a Popular Pharmaceutical Stock Up 395% Over the Last 5 Years