Mag Seven underperforms on rising equity supply
The Magnificent Seven stocks face structural headwinds and underperformance relative to the broader market due to a massive surge in equity issuance and capital expenditures.
The argument
The speakers argued that mega-cap tech companies are shifting from share buybacks to positive net equity issuance and heavy CapEx to fund AI infrastructure. This sudden increase in equity supply, combined with high valuations, is diverting capital to other growth pockets of the market.
The thesis, stress-tested
✓ What validates it
- ✓Continued underperformance of mega-cap tech ETFs relative to equal-weight indexes
- ✓Further announcements of multi-billion dollar equity or debt issuances by major tech firms
▸ Risks discussed
- ▸AI infrastructure investments could generate immediate, massive revenue payoffs
- ▸Companies could resume aggressive share buyback programs
Hear it yourself
"I mean, obviously, like, it's the hedge fund manager running the treasury because yen USDJPY gets up to $1.60. Things are a little teetery in markets, and then he knowingly was never going to take over a Kyrgyzlander strike, you know, what what he was saying. And it it's what they did at the end of March too to, you know, announce the end of civilization in Iran, you know, strike up fear, and then and then do this taco that gets a big fall crush. So it's become a lot more, I guess, predictable in this sense because it it it was very obvious to me this morning what playbook was going to be ran."
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