NVIDIA, an artificial intelligence giant in the stock market on Monday, lost nearly $ 600 billion, a one -day loss of a public company. How could the luck of one of our major companies suddenly fell so suddenly? Some people will seek answers to promising AI startups or representatives of trade policy from China, but these exercises will explain deeper changes in our financial markets by visiting ancient myths.
Our image, a snake that eats its own tail, is an amazingly durable and extensive topic. Ancient China, Egypt, Europe and Latin American civilization seemed to be captivated by images and people, symbolizing the periodic essence of life, the whole or fertility of the universe. Today, a more resonating lesson comes from our self -esteem of our Ouroboros, which helps to understand the most important financial puzzles of our time.
Like ourOuroboros, I think Big Tech is alive with more and more cash in investments because Big Tech is most likely to reduce yields. Monday modifications show that we can start to reflect our financial market and perhaps retirement portfolio guy.
Even after the deep Monday dip, the evaluation of the magnificent 7 of Microsoft, Apple, Amazon, Nvidia, Tesla, META, and Alphabet, sometimes separated, and the remaining stock markets still remain staggered. The magnificent 7 still forms more than 30 % of the S & P 500’s market cap (less than 10 % 10 years ago). Technology Goliath, a traditional way of importing or selling stock prices, and evaluating stocks, trades at a ratio of 493 at a ratio of 2 to 3 times.
Market watchers discussed whether large technology stocks will continue to perform performance than everyone else or whether they will catch up with other companies’ shares as they use artificial intelligence to increase productivity. But the mythology of ourOuroboros suggests another possible result.
The first step to understand this parable is to return to some financial basics. The prospects of the company are not always on the rise, and the stock price is not always rising. In addition, it increases when investors do not disadvantages that it takes longer to determine that a particular company is safer than other companies and generate profits for money.
Many industry watchers have argued that artificial intelligence will make a magnificent 7 property, but another reverse same sex is progressing. Investors did not require significant immediate profits by seeing these companies as safe bets. That’s why stock analysts’ import forecasts did not meet the company’s rapid stock price.
Why don’t investors expect more about investment costs?
I think global investors have come to see stocks of seven companies as the best safe assets. In the world of inflation spike, political instability, grid rock and financial uncertainty, will you not invest in a company with repetitions, repetitive revenue, stable cash flows, market location and respected management teams? It looks almost like the government of new generations of investors. In fact, as proven by Tesla’s special evaluation, it is clear that the founder Elon Musk inspired the loyalty similar to sovereignty. In the world of algorithm trading and passive investment, these beliefs are speeding up and the price of large technology stocks we can see today is very high.
How did the managers of the company respond to the large -scale inflow of cheap money? Perhaps you have to spend more and more capital into investments without worrying about exactly and exactly expected. From a practical point of view, what seems to do it is to interfere with the amazing ties that they spend on each other. In other words, they are alive themselves.
NVIDIA, the producer of the next -generation AI chip broken on Monday, earned almost half of his income from his brother and sister at 7 o’clock. According to the Google Equipment Court in 2022, Safari’s search engine is likely to account for about 20 %of Apple’s profits. META uses Amazon Web Services for cloud services, and uses more technologies in AI push, and all technology giants have announced a lot of spending on infrastructure.
And when technicians do not shower with each other, they often practice buying other forms of self -loan, that is, their stocks. Over the past three years, Apple, Alphabet, Meta, Microsoft and NVIDIA have rebuilt their stocks of more than $ 600 billion.
There is no especially problematic about magnificent 7 purchases and services. There is no problem in spending a lot of money on capital spending or stock repurchase. However, if these operations and capital allocation decisions are guided by the expectation of very low investors, the return can eventually be low. And it gives us a glimpse of the magnificent 7 and AI, not a boom, not a boom. Expenses for technical future, which is as revolutionary or untreated as much as promised.
More dangerously, like all companies, these companies will disappoint people who someday consider to be a safe asset. And self -ynibalization will be a shaking bet on fantasy that is not only an ordinary investment in itself, as well as a mythical and Messiah belief in technology and the company.
Similar epidemiology has formed a different period in American history. The amazing expansion of the 19th -century railroad caused a magical thinking. In the early 1900s and decades, the railroad industry formed more than 60 % of the stock market cap, which was considered a safe bet. Their low yields spent on steel, and ultimately created a huge large company steel in 1901.
What lasted in the first 20 years of the 20th century? These companies and ordinary profits are generally low in the stock market. With such a size, the natural limitations of railroads and steel players have become clear as well as the problem of the organization.
Of course, the natural physical boundaries that limit the growth of the US railroad may not exist in today’s magnificent 7. If artificial intelligence is truly universal technology, it can have much more potential. In other words, information technology has promised productivity growth for the past 20 years.
You do not have to see ancient folklore to find the description of ourOuroboros. The Economist Joseph Schumpeter once described capitalism as an almost mysterious renewal process. He admired the cycle of industrial mutations. The creative destruction process sounds like our Olovo Ross, but the image is easy to admire and grateful unless it is its own tail.
