Earlier 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.
That's a nice tautology
Mag 7 starting to underperform [pdf]
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Re: Mag 7 starting to underperform [pdf]
#152[dead]
Re: Mag 7 starting to underperform [pdf]
#153Earlier 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.
Yeah, but I think the recent explosion of both memory prices and stock prices of memory makers highlight that datacenter GPUs cost about 10x as much as the would in a healthy supply-demand situation. Gaming equivalents of datacenter GPUs (I know they are not the same, but those had a hell of a lot of compute and bandwidth) cost less than 1/10th when normalized to FLOPS.
So its scarcity pricing. If a paper were to come out tomorrow proving that additional compute has diminishing returns, there would be hell to pay in markets.
Re: Mag 7 starting to underperform [pdf]
#154Nothing 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.
Total Addressable Market (TAM)?
Re: Mag 7 starting to underperform [pdf]
#155Earlier 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."
> I look forward to your weather report too: "It's always sunny outside until one day it starts raining. Every time." I once ran across the comment that if you simply predict tomorrow's weather will be the same as today's you'd be correct 80% of the time. Not sure how true that is (can't find the source). Allegedly momentum investing does pretty well: * https://en.wikipedia.org/wiki/Momentum_investing (I'm more of an…
There are momentum indices. Momentum is actually a strange phenomenon from the perspective of the efficient market hypothesis because it does not have an obvious risk to balance its premium compared to other empirical factors.
Re: Mag 7 starting to underperform [pdf]
#156Apollo is a private-credit and alternatives house, and Slok is a long-standing concentration/AI-capex skeptic.
Re: Mag 7 starting to underperform [pdf]
#157I 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…
>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.
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.
Re: Mag 7 starting to underperform [pdf]
#158While 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!
I'm reading this comment as sarcastic, you don't think that the recent infrastructure build out is a positive?
Re: Mag 7 starting to underperform [pdf]
#159So 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.
The biggest fear of AI companies: that open source models will scale in such a way that renders these data centers obsolete.
Re: Mag 7 starting to underperform [pdf]
#160This 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 compan…
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?