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Mag 7 starting to underperform [pdf]

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Re: Mag 7 starting to underperform [pdf]

#31

Post by zerobees »

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.

Re: Mag 7 starting to underperform [pdf]

#34

Post by solumunus »

zerobees wrote: post #31

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 f…

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

Re: Mag 7 starting to underperform [pdf]

#35

Post by TravisJamison »

tomrod wrote: post #25
ares623 wrote: post #20

Earlier quoted context omitted.

Why is Apple included though?

Share repurchases also aren't great I guess?

Markets generally love buybacks.

The market is both happy that Apple didn’t spend all its cash on AI build-out, but also at the same time angry that Apple is “missing AI”.

Not to mention the grumblings that Apple has peaked.

Re: Mag 7 starting to underperform [pdf]

#38

Post by Lerc »

M3L0NM4N wrote: post #30
throw0101d wrote: post #6

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 Wo…

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

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

Every time.

Re: Mag 7 starting to underperform [pdf]

#39

Post by abirch »

Danox wrote: post #33

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

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.

Re: Mag 7 starting to underperform [pdf]

#40

Post by haberdasher »

zerobees wrote: post #31

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 f…

`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.

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