Hyperscaler free cash flow chart is interesting, but why does it omit Apple?
Mag 7 starting to underperform [pdf]
61–70 of 169 posts
Re: Mag 7 starting to underperform [pdf]
#62This is like a straightforward Red Queens Race story, isn't it?
Re: Mag 7 starting to underperform [pdf]
#63Earlier quoted context omitted.
> Apollo allocates capital as their day job. Mag7 allocates by vibes Lol what in the world? Is running a trillion dollar corporation anything other than allocating capital? You can argue that Meta made a poor capital allocation decision with VR and perhaps continues to do so with AI.
I have an opinion based on the data, yours may differ. Favorite this thread for when the music stops. It has before (1999-2000, 2007-2008), it will again.
I'm objecting to your categorization of the job of running one of the Mag7s as something other than "capital allocation". The CEO of Meta or Amazon or any of these other companies allocates capital all day long. They do it differently than an asset manager like Apollo for sure, and sometimes make worse decisions. But it's in the same category.
Re: Mag 7 starting to underperform [pdf]
#64Markets 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.
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.
Re: Mag 7 starting to underperform [pdf]
#65Earlier quoted context omitted.
If a stock market observation has no predictive power, then it's worthless. I look forward to your weather report too: "It's always sunny outside until one day it starts raining. Every time."
Off topic, but I love your username.
hey he hacked my computer his user has a home folder inside of /dev
Re: Mag 7 starting to underperform [pdf]
#66Earlier quoted context omitted.
Yes, but when their run ends they tend to underperform. Every time.
If a stock market observation has no predictive power, then it's worthless. I look forward to your weather report too: "It's always sunny outside until one day it starts raining. Every time."
ye, the stock market isn't magic, it's just a collection of what people think. and people can be very wrong in a big way.
Re: Mag 7 starting to underperform [pdf]
#67Apollo 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).
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.
Re: Mag 7 starting to underperform [pdf]
#68Earlier quoted context omitted.
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.
Many people who replied to you seem to have missed your joke. I appreciated it.
Re: Mag 7 starting to underperform [pdf]
#69as 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!”
Re: Mag 7 starting to underperform [pdf]
#70Earlier quoted context omitted.
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.
One is not spending anything out of the ordinary up until this point in comparison to their competition. But the Apple Silicon design group might start spending some money on something practical, something that might begin the typical Apple long-range process of replacing two or three existing companies within their current supply chain, but that’s nothing new over the last 25 years.
It is a bit unfair to lump Apple in with everyone else in the Mag7, as their strategy is arguably reasonable and prudent for the current position of the hype circle. Apple Silicon was a spectacular decision and investment. Everyone else has lost their damn mind.