In the stock market on Monday, artificial intelligence giant, during NVIDIA, losing about $ 600 billion worth of dollars, The loss of the largest single day For a public company on record. How can one of our leading companies suddenly fall suddenly? Although some will look for answers in the AI startup or trade policy abuses from China, these movements talk about deep changes in our financial markets that can be explained, strangely, revised ancient myths. By
The icon of Overlobos, which a snake eats its tail, is a remarkable Durable and widely shaped. Ancient Chinese, Egyptian, European and Latin American civilizations are fascinated by this image or people like it, which are a symbol of the cycle of life, the universe or the overall nature of fertility. Today, Aur Boros’s self -related lessons come more than a lesson, which helps us understand the most important financial puzzle of our era.
Like Orburos, I believe that the Big Tech is eating itself alive with its component companies, throwing maximum cash in investing in each other, which is likely to be minimal. Monday correction shows that our financial markets – and possibly your retirement portfolio – is starting to reflect the understanding of this dynamic.
Even after Monday’s dip, the prices between the Big Tech – sometimes known as Microsoft, Apple, Amazon, Nydia, Tesla, Meta and the magnificent 7 of the alphabet and the rest of the stock market Surprised. Excellent 7 Still S&P 500 market capitalization is more than 30 % (just a decade ago only less than 10 %). When you compare their stock prices to their earnings or sales, the traditional way to measure the price of a share, trade in our tech goliats proportion, which is non -disconnected than 493 to two times higher.
Market viewers have argued whether Big Tech stocks will continue to perform well, or if other companies will be captured in shares as they use artificial intelligence to become more fruitful. But the fiction of Orburos suggests another potential consequences.
The first step to understand this resemblance is to return to some finance basics. Stock prices do not always rise as companies’ future prospects improve. They also get up when investors decide to become a safe bet for some companies than others and do not impose a fine on them for taking more time to return for their money.
Although many industry eyes have argued that artificial intelligence will cause the fate of the magnificent 7, another dynamic process is in the process – investors see these companies as a safe condition and thus Immediately demanding immediate profit. That is why the prediction of the stock analysts has not kept these companies’ sky -related stock prices.
Why wouldn’t invest in investors expect more of their investment dollars?
I am convinced that the global investors have come to see the equity of these seven companies as Premier Safe Assets. In the world of inflation, in the world of political instability and grid lock and financial uncertainty, why not the balance sheet in the fort, repeated income, stable cash flow, market positions and respected management teams companies. Why not invest? It seems that a new generation of investors see these companies as almost as governments. In fact, as evidenced by Tesla’s extraordinary diagnosis, it is clear that its founder Elon Musk has influenced a loyalty that is equivalent to an independent. In the world of algorithmic trade and passive investment, these beliefs See a speed As a result, today we see that big tech stocks have high prices.
How has the managers of these companies respond to this massive arrival of cheap money? Perhaps, especially as they should have, putting more investment in investment without worrying about returning very quickly. From a practical point of view, it seems that what they have done is a remarkable Torian to spend on each other. In other words, they are eating themselves alive.
Navadia, which is the most beloved creator of the next generation of AI chips, whose stock was crushed on Monday, almost half of his income received a magnificent 7 with his siblings. In 2022, Google paid to Apple. billion 20 billion According to the non -sealed judicial documents, safari is the privilege of having a default search engine, and therefore approximately 20 % of Apple’s profits. Meta Amazon hires for web services Cloud Services And In its AI push fasterAnd all tech giants have eliminated an abnormal amount of costs On infrastructure.
And, when tech companies are not shedding money on each other, they often follow another form of canalism: buy their shares. In the last three financial years, appleFor, for, for,. AlphabetFor, for, for,. MethodFor, for, for,. Microsoft And nvidia A notorious time has bought more than 600 billion billion from your stock Low return activity.
There is no particular problem about the 7 products and services buying from each other. Nor is there anything wrong with spending large quantities on capital costs or stockbacks. But, if all these operational and capital allocated decisions are guided by the expectations of very few investors, they can eventually make less profit. And this gives us a potential glimpse that the boom instead of the magnificent 7 and AI, which is ahead of the rest of the non -existent 493, spreads further up to the bubble or rally, we slow down on excess Can observe grinding. Spending on a technical future that will not be revolutionary or closer to the promise.
More dangerously, these companies- Like all companies – One day will disappoint those who see them as safe assets. And the self -made itself will not only reveal itself as a minor investment, but is a prerequisite for technology and the deception spread by a myth and Christian belief in these companies.
Similar dynamics have created previous periods in American history. In the 19th century, the remarkable extension of the railway gave rise to similar magical thinking. Until the early 1900s, after a few decades, the rail industry created More than 60 % of Equity Market CapitalizationAnd his bonds were considered A safe condition. Their Low output Fuel expenses on steel and, ultimately, give rise to creation Huge collective American steel In 1901.
What happened in the first two decades of the 20th century? Returns from these companies significantly lower profits and minor The total stock market. Natural limits on railway and steel players soon became clear, as Organizational issues Who walk with such a scale.
Of course, natural physical boundaries that limit the development of the US railway cannot be available for today’s magnificent 7. If artificial intelligence is really, then it is really. General purpose technologyThen it can have more potential. He said, Information Technology has been promising to increase such productivity for the past two decades. Without supplying.
No one needs to see ancient folk tales to find the pictures of Orahos. Economist Joseph Smiparter once Described Almost as a mystical renewal process. He appreciated Is written About a cycle of industrial change, “which constantly revolutionize the economic structure, and it constantly destroys the old, which constantly creates a new one.” This process of creative catastrophe looks like Yourobooros – but it is easy to praise and appreciate this image if it is not your own tail that is being eaten.
