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).
It's more like a year of underperformance, sometimes longer
Mag 7 starting to underperform [pdf]
131–140 of 169 posts
Re: Mag 7 starting to underperform [pdf]
#132US Big Tech is betting the house on AI, news at 11.
Re: Mag 7 starting to underperform [pdf]
#133Earlier quoted context omitted.
Yes, earnings are essentially hype/BS. Focus on cash/cashflow.
$64B trailing twelve months free cash flow. ( https://s206.q4cdn.com/479360582/files/doc_financials/2026/q... )
That's trailing and mighty impressive. However when you decided to quote Q1 earnings. $62bn of Q1 earnings ends up at only $10bn. The LTM numbers are less relevant.
AI-related capex is one hell of a drug.
Re: Mag 7 starting to underperform [pdf]
#134Historically 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…
> 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.
This is wrong. There is no lookahead bias in the factor.
Re: Mag 7 starting to underperform [pdf]
#135Historically 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…
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.
Re: Mag 7 starting to underperform [pdf]
#136Earlier quoted context omitted.
$64B trailing twelve months free cash flow. ( https://s206.q4cdn.com/479360582/files/doc_financials/2026/q... )
That's trailing and mighty impressive. However when you decided to quote Q1 earnings. $62bn of Q1 earnings ends up at only $10bn. The LTM numbers are less relevant. AI-related capex is one hell of a drug.
The discussion here is whether Google can make money in the AI world. They obviously can. Whether they turn around and spend that money on capex to try and increase future earnings is irrelevant.
Re: Mag 7 starting to underperform [pdf]
#137Earlier quoted context omitted.
The market runs on memes, hype and fraud. Fundamentals haven’t mattered for a long time.
I guess Google’s Q1 earnings of $62 billion were just hype.
And a market cap that exceeded 4.5 trillion dollars. I think we can all agree that Google is a legit business. But they were doing fine in 2023 too and had solid y/y revenue growth for much of their history. Their market cap tripled since 2023 and doubled since mid-2025. So, it's clearly more than "they continue to be a profitable company that grows around 15% y/y in real terms".
Re: Mag 7 starting to underperform [pdf]
#138I 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…
> increase stock repurchases
buy high, sell...whenever?
Re: Mag 7 starting to underperform [pdf]
#139While 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…
Ah yes, just what everyone needs: more data centers!