Mag 7 starting to underperform [pdf]

https://www.apollo.com/content/dam/apolloaem/pdf/daily-spark/2026/jun/28/062826-Mag7.pdf

by mooreds • 23 days ago

191 160 23 days ago

edot• 23 days ago

You can tell these guys know nothing about LLMs or how they’re provided. I love how they show OpenRouter’s graph of token usage as if it speaks for usage across the board. DeepSeek looks like the king because people who use Anthropic and OpenAI use them on either a direct basis or AWS Bedrock …

And the bar chart for token costs, really? As if that’s information? Their sources are the API docs ffs. If they had at least modeled something to estimate token costs that would be interesting, but showing the public prices and calling it research is dumb.

toomuchtodo5• 23 days ago

Apollo Group has $1T assets under management, I believe them over most folks on HN. Their argument that the Mag 7 is burning up all of their free cash flow is factually accurate, as the returns are not materializing for the investments being made (ie underperformance).

re-thc2• 23 days ago

Apollo Group has $1T assets under management, I believe them over most folks on HN

If only that's a measure of if they know how to time the stock market. The real measure is how much they earn not if their sales or marketing department manages to get more customers.

davidpapermill3• 23 days ago

The Mag 7 spending around $700B on capex this year, expected around a trillion next year.

That's more than their combined FCF, and they're borrowing to bridge the gap.

petesergeant• 23 days ago

Apollo Group has $1T assets under management, I believe them over most folks on HN

Ah, the old _argumentum ad giletum Patagoniae_

roboror• 23 days ago

If we're doing money=smart, the mag 7 control almost $4T in assets and cash, so wouldn't you trust them even more?

staticman2• 23 days ago

Vanguard has 12T under management so you believe any PDF they put out 12 times more?

pj_mukh• 23 days ago

"I love how they show OpenRouter’s graph of token usage as if it speaks for usage across the board."

I'm not sure what was said during what looks like a deck of a presentation? I'm hoping it wasn't this, because that's an obvious misfire.

CamperBob23• 22 days ago

I love how they show OpenRouter’s graph of token usage as if it speaks for usage across the board.

Based on the light-gray shade on your comment, I'm guessing most HN'ers don't understand how questionable that particular graph makes the rest of the presentation look.

It's like publishing a physics textbook and including an appendix on astrology.

wolframhempel• 23 days ago

This seems healthy to me. A market where returns are less dependent on seven mega-cap names is probably more stable, not less. If earnings growth broadens out and capital starts flowing back toward quality and free cash flow outside the obvious AI winners, that should reduce concentration risk and make the whole market less fragile.

throw0101d4• 23 days ago

Historically stocks that had a good run then tended to underperform:

[…] Since 1926, the median ten-year return on individual U.S. stocks relative to the broad equity market is –7.9%, underperforming by 0.82% per year. For stocks that have been among the top 20% performers over the previous five years, the median ten-year market-adjusted return falls to –17.8%, underperforming by 1.94% per year. Since the end of World War II, the median ten-year market-adjusted return of recent winners has been negative for 93% of the time. The case for diversifying concentrated positions in individual stocks, particularly in recent market winners, is even stronger than most investors realize.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4541122

M3L0NM4N2• 23 days ago

I mean these stocks have been performers for decades. If you posted this 10 years ago you'd look really wrong.

Lerc2• 23 days ago

Yes, but when their run ends they tend to underperform.

Every time.

throw0101d4• 23 days ago

I mean these stocks have been performers for decades. If you posted this 10 years ago you'd look really wrong.

And Japan performed ridiculously well for over decades and then stagnated for decades after that, but it averaged out between the two periods:

Ben Carlson: It's just a really long mean reversion. You got like 22% per year from 1970 to 1989 in Japan. Small caps in Japan did 30% per year for two decades.
It's insane. The returns almost had to be poor after that. If you put them together, the boom with the bust, it's like almost 9% per year.
It's kind of crazy. Over 50 years, the long-term worked. It's just that over that 20 or 30-year period, it didn't work so well.

* https://rationalreminder.ca/podcast/412 (~4m20s)

Annualized 9% per year is pretty good: the S&P 500 has average 10% since 1957 (70 years). Is there anything preventing US equities from doing the same thing: great performance from 2010 until now, and then 10+ years of stagnation starting (theoretically) tomorrow. If you look at 2000s S&P 500 you got zero returns, and the only thing that would have saved a US domestic (only) investor was having a bond allocation:

* https://www.forbes.com/sites/advisor/2010/09/13/its-not-real...

This is why diversification is important. People talk about "US stocks" doing well, but have US industrials done better than non-US industrials? US finances or energy done better than non-US? Or are "US stocks" doing better simply because tech stocks specifically have done better? Perhaps a US allocation is really a tech sector play:

* https://ofdollarsanddata.com/should-your-portfolio-be-100-us...

dheera• 23 days ago

Historically stocks that had a good run then tended to underperform

This is more of a mathematical axiom than a financial effect, because you're defining "underperform/overperform" with respect to an average that contains them.

gruez3• 23 days ago

> Historically stocks that had a good run then tended to underperform
because you're defining "underperform/overperform" with respect to an average that contains them.

Why is this true? For instance, if you're comparing the GDP growth of countries in the G7, why is it that one country (eg. US) can't consistently overperform year after year?

https://ourworldindata.org/grapher/gdp-per-capita-worldbank?...

Or if you want make it even more clear, you can construct a index consisting of two countries: a normal country (eg. US) and a basketcase (eg. DRC):

https://ourworldindata.org/grapher/gdp-per-capita-worldbank?...

throw0101d4• 23 days ago

This is more of a mathematical axiom than a financial effect, because you're defining "underperform/overperform" with respect to an average that contains them.

Most stocks suck:

We study long-run shareholder outcomes for over 64,000 global common stocks during the January 1990 to December 2020 period. We document that the majority, 55.2% of U.S. stocks and 57.4% of non-U.S. stocks, underperform one-month U.S. Treasury bills in terms of compound returns over the full sample. Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251

Four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing four percent of listed companies explain the net gain for the entire U.S. stock market since 1926, as other stocks collectively matched Treasury bills. These results highlight the important role of positive skewness in the distribution of individual stock returns, attributable both to skewness in monthly returns and to the effects of compounding. The results help to explain why poorly-diversified active strategies most often underperform market averages.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447

And this certainly can have a financial effect on your finances: having the "wrong" stocks in your portfolio (i.e., most of them) and not have the "correct" ones will mean a (e.g.) comfortable retirement or not.

energy1232• 23 days ago

This is wrong. There is no lookahead bias in the factor.

energy1232• 23 days ago

It's interesting, but the usual disclaimers apply with factor research

- Does it replicate internationally?

- Is it explained by another phenomenon such as the beta anomaly or small cap premium. Implication: large caps with high beta are already known to underperform, so this this isn't a new regularity.

patrickk2• 23 days ago

On slide 6, they list the Mag7 stocks (not defined in a foreword), but on slide 8 they list the free cash flow (FCF) of a somewhat different set of companies. Why not stick to the Mag7 FCF only? It muddies the waters.

anonu2• 23 days ago

the FCF slide is for hyperscalers - which excludes TSLA, NVDA

patrickk2• 23 days ago

Yes but the Mag 7 is the main focus, suddenly switching to a different set of companies is comparing apples to oranges. That slide belongs in an annex.

sroussey• 23 days ago

Apple is not burning its cash on buildout, which would make their graph less interesting.

enopod_• 23 days ago

True. This slide also struck me the most, but for the data it shows. Free cash flow for all the hyperscalers basically evaporated in the last couple of months, with Oracle in the minus. What does this mean?

re-thc2• 23 days ago

It is less that the Mag 7 is starting to underperform and more that a market correction is likely and coming very soon.

anonu2• 23 days ago

I guess "nothing lasts forever".

rvz• 23 days ago

Of course. The rest 'n vest people at FAANG companies will tell you its lasts forever 6 years ago. Now they are scared for their jobs.

This is why we are seeing a correction at those companies, perks and free food going away with constant layoffs and all time low morale.

Now the party is at Nvidia. But I will tell you that that will not last forever either.

Espressosaurus• 23 days ago

Everything reverts to the mean in the long term.

Maybe even the state of unprecedented relative peace we had enjoyed.

guluarte• 23 days ago

This feels like telecom "massive demand, bad returns".

If a good enough model can be swapped in every few months, the value moves away from the model and toward cheap inference. That is great for users, but not always great for returns on huge capex.

interestpiqued• 23 days ago

The only mag 7 that had a shooter chance with models is Google rn so doesn’t seem like there being good enough models will be that negative for mag 7. Might even be better since they are the providers for the inference

bwfan123• 23 days ago

I like that the invisible hand of market is slapping the Mag-7 for capex which is the only way to discipline them. Investors are waking up to say: hey, you are spending all your profits on data-centers, where is the return for me ? But, it surprises me that there are vast pools of capital which we collectively call the "market" that makes these calculations, or maybe a simpler causal explanation is the missing stock repurchase bid. At some point, one of the hyperscalers (msft ?) will break from the pack and announce reductions to capex and increase stock repurchases to stem the decline.

ares623• 23 days ago

Why is Apple included though?

tomrod• 23 days ago

Share repurchases also aren't great I guess?

eitally• 23 days ago

My perception is that the market lumps companies together into sectors whether they have similar business models or not. When one is punished, other associated firms tend to be, too. You see this in any industry (not as a guaranteed rule, but in general).

DaedalusII• 23 days ago

because $100bn annual revenue, high FCF, high margin. Its a monster.

twoodfin• 23 days ago

You can simultaneously believe that the hyperscalers are becoming capital-intensive long-term in a way that’s bad for their profits and that as a result will be raising the COGS of Apple’s business in a way that also hurts profits.

ambicapter• 23 days ago

increase stock repurchases

buy high, sell...whenever?

ctoth• 23 days ago

increase stock repurchases

I just can't wait to get back to when innovation meant financialization, can you?

Building things? Real Jobs for real electricians? Real buildings? Real compute? Why would anybody want that!

gandalfgeek• 23 days ago

6 months ago when Mag7 was overperforming everyone was worried about it being too high a fraction of the S&P500.

andxor2• 23 days ago

Exactly. As usual people are bullish at the top and bearish at the bottom.

jstanley• 23 days ago

Is this the bottom?

amelius• 23 days ago

The once high-flying "Magnificent Seven" are looking more like the Dreadful Seven.
The why: Wall Street is growing increasingly impatient with Big Tech's astronomical capital expenditures on artificial intelligence, projected to balloon 70% to exceed $700 billion this year.

ianm218• 23 days ago

What has been the best way to determine return on the AI specific capex for hyperscalers?

I would naively expect Microsoft’s to be the highest since they are probably mainly just selling access to their capex through cloud since they aren’t seriously pursuing frontier AI, I’d imagine Google to be in the middle (selling TPUs, general cloud GPUs, Gemini, revenue lift on ads from better AI) but also spending heavily on infra to compete with OAI/ Anthropic, and then Meta to be on the low end since they are likely getting serious revenue lift from AI but not monetizing their models by API.

davidpapermill3• 23 days ago

Planned Capex for 2026:

Amazon $200B

MS $190B

Alphabet $175B-$185B

Meta $115B-135B

Danox3• 23 days ago

Apple is nowhere to be found.

davidpapermill3• 23 days ago

$14B (!!!)

https://finance.yahoo.com/news/apple-lazy-ai-strategy-could-...

geori• 23 days ago

OMG - ridiculous to evaluate it based on the last 3 mo.

zerobees2• 23 days ago

I am invested in some of the companies that are downstream of the capital expenditures of Big Tech (e.g., COHR), so I have nothing to complain about.

I am really struggling to see what's the investment thesis behind Google valuation increasing 2x in response to AI, though. Assuming no magical AGI singularity, by the end of the day, they're still selling the same services, but the services have gotten more expensive for them to provide. Everyone was already using Google Search, but now, provisioning AI summaries on top of requires more compute. Everyone was already using Google Docs and Meet, but now, AI features cost Google more. Etc, etc.

The only place where they stand to make money is selling AI compute to enterprises. But with the current supply-chain challenges, the margins there are probably getting thinner.

solumunus• 23 days ago

The market runs on memes, hype and fraud. Fundamentals haven’t mattered for a long time.

senordevnyc3• 23 days ago

I guess Google’s Q1 earnings of $62 billion were just hype.

neogodless• 23 days ago

You're half right.

The market sets prices, and they are set based on multiple things. One of those is fundamentals. Consider the value of assets, whether tangible or intellectual property, human resources, binding contracts, etc. that add up to reasonable revenue forecasts and so forth.

And the other aspect of prices is based on conjecture, speculation, meme-joiners, believing hype, and in some cases, fraud.

The secret sauce is always going to be the one who can figure out, between the two factors going into price, what's right, and when.

BUT... just saying that all stock market pricing is based on unreliable factors? That's not a useful, actionable statement. You can certainly stay out of investing in that market, but is that going to be your best course of action?

haberdasher• 23 days ago

`I am really struggling to see what's the investment thesis behind Google valuation increasing 2x in response to AI`

Google is basically Nvdia (TPUs), Tesla (Waymo Self-Driving), Hyperscaler, Netflix (YouTube) and a massive VC (Anthropic, Databricks, SpaceX, etc.) all rolled into one.

Their valuation isn't really a 2x'ing so much as a reversion from halving.

cik• 23 days ago

It's frequently said that vonglomerates usually carry through as their valuation, the multiplier of the lowest holding. If that's the case, Alphabet is worth more broken up. Similarly that makes their current valuation (and nay any valuation) theoretically too low.

senordevnyc3• 23 days ago

Google is a money printing machine, and their Q1 revenue and profit were up significantly vs last year.

paulpauper2• 23 days ago

Same for META

epolanski2• 23 days ago

I know several non tech companies that use Gemini and NotebookLM heavily (banks, insurance, consulting).

nradov3• 23 days ago

The investment thesis is a torrent of cash arriving to index funds and retirement target date funds has to go somewhere.

blehn• 23 days ago

Google is a good bet because if AI continues to boom, they're in a good position (frontier lab, vertically integrated). If the bubble bursts and the frontier labs fail, they might do even better.

Legend24403• 23 days ago

Assuming no magical AGI singularity, by the end of the day, they're still selling the same services, but the services have gotten more expensive for them to provide.

Well, they're hoping to sell new services on expensive $200/month subscriptions.

The hope is that agents have more value than traditional software, because they do the work for you instead of just enabling you to do the work.

entropi2• 23 days ago

But if they do the work for me, then my time is less valuable. If my time is less valuable, I won't pay more to save more of my time.

scarmig• 23 days ago

Google has a compelling story for many AI scenarios: it has lots of outs. It's the only frontier lab for which that's true. A massive bubble bursting wouldn't be existential for Google; it would be quite painful, but survivable, and even offers some potential upside (picking up assets and researchers from the wrecked, mangled corpses of other frontier labs on the cheap).

brainwad• 23 days ago

GCP has wild YoY earnings growths and it has accelerated since cloud AI became a thing. AI is finally bringing Google a real second line of business besides ads.

mattas2• 23 days ago

Apollo should be smart enough to know that you can't draw any conclusions from 1 month of market data (especially when there was a big, relevant IPO).

vb-8448• 23 days ago

Actually it's almost 2 months /s

bradfa• 23 days ago

Right, but they're smart enough to know how to manipulate the market short term with such "research" and then take advantage of it, all without breaking the law.

jackb4040• 23 days ago

I'm astoundingly unimpressed by the quality of this slide deck. There's no analysis except that crammed into slide titles, like it's designed to bombard a room full of analysts with so many graphs that they shut off their critical thinking. Could a freshman business student not make this? Could a freshman business student with an LLM not make something more convincing than this?

I agree with the headline, but this really feels like analysis-slop. It's only remarkable in terms of who is publicizing it.

mattas2• 23 days ago

This was my reaction, as well. It's almost entirely technical analysis mumbo jumbo.

teepo2• 23 days ago

I assumed it was accompanied by an oral presentation or another report. I didn't look around enough to see if there is a transcript or anything though.

paulpauper2• 23 days ago

It's more like a year of underperformance, sometimes longer

Danox3• 23 days ago

Nothing wrong, necessarily, but Tesla doesn’t belong to that seven they never have.

abirch• 23 days ago

What TSLA lacks in cashflow, they more than make-up in TAM. Make-up as in create out of thin air. We'll have self driving cars in a few months, robots, semi-trucks, etc., etc.

duped• 23 days ago

Don't forget that no auto manufacturer in the world, and certainly not in China, is poised to capture any of that TAM.

ajmurmann• 23 days ago

Always a few months away. The nuclear fusion of products portfolios.

jknoepfler2• 23 days ago

Maybe they'll buy a failing AI company and update their grift portfolio.

flowerthoughts• 23 days ago

Elon is missing the bigger TAM here. Once they've created a time machine, they can not only sell all these things backwards and forwards in time, they can also start making industrialization come way earlier, which will lead to exponentially turbo charged growth. Plus importing future designs into the now.

It makes sense to focus all effort into building a time machine.

kristianp• 23 days ago

Total Addressable Market (TAM)?

TravisJamison2• 23 days ago

Markets are obviously, rationally, not happy about the overspending.

But what gives me pause is that a some of the mag 7 (think Meta) could change their mind on AI build-out tomorrow, and 1-year from now have the same amazing free cash flow they always did.

infecto• 23 days ago

I tend to agree. I suspect if we look back a few years from now that there was some overspending but I still believe the risk of not investing and missing out is greater than the current historical trend of capex spend. I have not looked recently but has demand of compute started to slow down. It was just a few months ago when companies like Anthropic were throttling users because there was not enough of it.

2748484848• 23 days ago

I don't think most people quite grasp the sheer size of the debt obligations Meta and specially Oracle have gotten into. Meta has done some clever tricks to keep it off the main books, but it IS there. If no AGI, its gonna drag them down for a decade.

uejfiweun2• 23 days ago

This is probably a hot take and I am by no means a financial expert and this is probably quite wrong. I personally think that attempting to value these companies using the same methodology as the history of all American companies is fundamentally wrong. Sure, some mom and pop small local regional business that overperformed is probably more likely to underperform. But when it comes to big tech companies, these companies are operating a data and capital flywheel that doesn't easily just slow down. I mean, you look at the history of these computer tech companies, especially software companies. They really haven't slowed down. Like, look at Microsoft. It's just been growing from the very beginning, pretty much.

forlorn_mammoth• 22 days ago

I respect your humility, and agree that you have an insight.

what I am curious about is how you would think about valuing these companies? Let's take it for a given that they are data and capital flywheels, and that this flywheel driven growth will continue for the next 100 years.

And say the valuation based on this measure says the company should be worth X today and X_y = X(growth rate per year)(y years) in y years (yes, I know we should use exponents not multiplication, but that's hard to render in this text editor).

and the price today is P.

What is the ratio of P to X? What is the ratio of P to X_y?

If P today is greater than X_y in 5 years, do you still buy it?

uejfiweun2• 22 days ago

I wish I had a good answer to give you here. I really don't understand financial markets. I more so just have a basic understanding of history and technology - my individual stock purchases are mostly me taking my knowledge base and extrapolating into the future and trying to figure out what companies I think are likely to grow.

As you can probably guess, I mostly try to stick to low-cost index funds, because my above "strategy" is nothing more than gambling.

I'm curious as to what your answers to the question are?

jnwatson• 23 days ago

While I agree with other comments indicating that the headline is drawing on a small period of data, other data in the deck is pretty compelling.

Page 25 "The number of data centers in the US" gives an interesting insight as to the magnitude of the data center boom. 60% more data centers are being planned or are under construction. This might actually be underselling it in dollar amount, as I believe the average data center size under construction is larger than the average data center already constructed.

Page 27 "Cyclically adjusted P/E ratio near all-time highs" is certainly concerning and points to a near term correction.

Creamsicle47• 23 days ago

Ah yes, just what everyone needs: more data centers!

nsvd2• 23 days ago

I'm reading this comment as sarcastic, you don't think that the recent infrastructure build out is a positive?

int32_64• 23 days ago

The dumps on memory/hardware stocks when these companies scale back purchasing is going to make Trump's shitcoins look sovereign bonds

-signed a bitter somebody that had to buy a new SD card for my camera last week.

highfrequency• 23 days ago

Hyperscaler free cash flow chart is interesting, but why does it omit Apple?

CamperBob23• 22 days ago

I'm not sure I actually understand what defines a "hyperscaler" company, but I doubt Apple would be considered one.

They are sitting on their war chest, not spending money on scaling anything anywhere.

tptacek• 23 days ago

This is like a straightforward Red Queens Race story, isn't it?

ohyes2• 23 days ago

as soon as you start calling a group of stock tickers the “magnificent 7” they’re destined to underperform, as that’s a feelings based assessment and many investors will continue to buy the feelings long past the value being fair.

“Do they make money? I don’t know but I know they’re magnificent!”

bArray• 23 days ago

I think page 4 is a little disingenuous, I'm pretty sure you could pick lots of windows and show the mag 7 deviating negatively, but then later trends positive. I believe this whole thing will pop, but I'm not quite convinced it is just yet.

Page 8 for Oracle's free cash flow trending negative is really quite impactful. The Bloomberg AI bubble diagram [1] shows how this could really blow up. If Oracle falls they could take the whole market with them. We're just waiting on the mag 7 or any closely linked companies to fail to raise investment.

Page 16 really outlines how insane these evaluations are. I think most countries see it, hence aggressive selloffs of US bonds [2]. But everybody is just too insanely heavily exposed to it all now, it's going to wipe out everything. It's going to be a very awful time when heavily debt strapped countries can't issue debt anymore.

I think what we're going to see is some insane moves to keep these companies afloat longer in some desperate attempt to delay the pop, which will just make a bigger bubble. I could see Nvidia for example issuing bonds in excess of $100bn soon if the market has appetite for it [3].

[1] https://archive.is/0bYLS

[2] https://sg.finance.yahoo.com/news/china-japan-uae-india-sell...

[3] https://uk.finance.yahoo.com/news/nvidia-raises-over-21-5bn-...

gniv• 23 days ago

Some of this might be mechanical since so much money went into the chip companies.

TheAtomic• 23 days ago

That free cash flow drop at AMZN is surprising.

teepo2• 23 days ago

yeah i was interested as well. -$2.5B from $11B last year. However the analysts see it recovering quickly. If you put all the Trainium(N) chip investments aside as being all AI risk, they still have some good pipeline with the satellite internet stuff (Delta, JetBlue, Vodaphone).

epolanski2• 23 days ago

Not mentioned in the comments but all those companies are taking significant debt and even issuing new shares.

One major part of the investment thesis in these companies were their constant stock buy backs. Now their gargantuan Capex that sees no end but acceleration is back at diluting investors.

I think the companies will keep doing fine, but the financial outlooks are no longer as rosy.

mixedbit2• 23 days ago

Could outperformance of largest cap companies be partially explained by dividends paid by smaller caps? Reasoning behind this:

* Index investing raises in popularity, with index funds that automatically reinvest dividends being often preferred due to their tax efficiency.

* Large caps prefer to repurchase stocks, stock repurchases contribute fully towards a given company share price increase.

* Smaller caps still pay dividends, these dividends are then reinvested by index funds and the reinvestment is weighted by capitalization, so large caps share price benefits more from repurchases done with dividend cash paid by smaller caps. When dividend is paid, share price of a company that paid it is reduced, which further widens the performance gap between large and smaller caps.

gruez3• 23 days ago

* Large caps prefer to repurchase stocks, stock repurchases contribute fully towards a given company share price increase.

That doesn't work because indices are typically market cap weighted. A stock buyback might increase nominal stock prices, but not the market cap, otherwise it'd be a free money machine.

mixedbit2• 23 days ago

You are right, but if stock repurchase does not increase market cap, dividend payment still decreases it (unless it would be fully reinvested in the same stock, which it is not, it is largely reinvested in largest caps).

semanticc• 23 days ago

That's not an effect. As both in the case of a dividedend and a stock buy back, the company's market cap drops by the amount of cash that's being distributed out, creating an identical re-buying situation in market cap-weighted index funds. Stock price itself is irrelevant for index fund rebalances (unlike for shareholder returns).

redwood• 23 days ago

It is not accurate to say that reinvesting dividends offers tax efficiency. Dividends are generally taxed in year whereas capital gains are only paid when an equity is sold. I think what you're actually referring to is a slightly different phenomenon which is that index ETFs have this handy ability to rebalance funds between stocks in the index in a way that doesn't itself lead to capital gains taxes and this is a definite tax advantage of ETFs.

Anyway I just wanted to call out that Dividends are considered tax inefficient which is why stock buy backs became popular

ekjhgkejhgk• 23 days ago

haha Oracle bleeding money. If AI ended up killing Oracle that would've been so great.

nh23423fefe• 23 days ago

I only care what the market is at >25 years from now

Barbing2• 23 days ago

Yeahhh but...

OK, I guess it _would_ be pretty hard to have an _unrecoverable_ crash...

ai-x• 23 days ago

Completely missing the point of not adding Anthropic, OpenAI, SpaceX.

Mag7 is just an arbitrary list of companies that were coined at a specific time with no rigor.

If you must do rigorous analysis, then just like S&P 500 you need to add drop BigTech / High Growth companies continuously to this Mag7 (or Mag10) and then do analysis

fragmede• 23 days ago

MU is up like 1,700% since 2024, so yes they are, but "under" is relative.

gabriel-uribe• 23 days ago

So many chart crimes, but aside from that.

Seems like we're seeing margin get eaten up by companies upstream of the buildout, and the costs have not been fully passed downstream yet. Eg most consumers still get free/cheap AI.

It'll take a few years to see what happens at scale when prices go up and purchasing behavior changes. Hardware, services etc all downstream of the buildout and supply constraints.

neuralkoi• 23 days ago

The biggest fear of AI companies: that open source models will scale in such a way that renders these data centers obsolete.

alecco• 23 days ago

US Big Tech is betting the house on AI, news at 11.

projektfu• 23 days ago

Hmm, four of the magnificent seven get shot down in the end. Might not be the best name for a stock play.

maxnevermind• 23 days ago

As Steve Eisman said: Mag7's businesses becomes capital intensive and they also seems to lack a strong moat, that will make investors more reluctant to buy keep buying their stock.

arisAlexis• 23 days ago

It's funny how schadenfreude works in markets. But AI isn't going anywhere.

jnaina• 23 days ago

Apollo is a private-credit and alternatives house, and Slok is a long-standing concentration/AI-capex skeptic.

Mag 7 starting to underperform [pdf]

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