MAGS/long
Mag 7 already worth 1.8x Europe; AI value will compound the same way computers did
And yet, despite the dot com boom and bust the Magnificent 7 now have a market cap 1.8x that of Europe. A similar issue is arising with AI where the macroeconomic data is not yet equipped to capture the value produced by AI
Peak+0.2%
MSFT/long
Captured AI value accrues to firms with market power who hold price as costs collapse
This captured AI will only exist where companies have genuine market power, and can protect prices in the face of declining costs of production.
Peak+9.2%
XYZ100/long
AI output is invisible in macro data while costs are visible, so the AI-heavy index gets misread cheap.
Any reasonable measure of the macro economy must in some way account for this or the AI boom may read to the data as an AI bust.
Peak+1.7%