The Magnificent 7's Hold on 37% of the S&P: Market Bubble or the New Standard?
- NYU professors Galloway and Damodaran warn of a "bubble" in the Magnificent 7 tech stocks, which control 37% of the S&P 500's value. - They highlight unsustainable AI-driven valuations, with Nvidia's $1T revenue projection requiring 80% perpetual gross margins deemed unrealistic. - Market volatility grows as S&P 500 faces its longest losing streak since 2025, while alternative assets like trading cards gain traction amid investor caution. - AI optimists counter that robust cash flows and cross-industry i
Scott Galloway, a marketing professor at NYU Stern and a business founder, has sounded a serious alarm regarding the U.S. economy, predicting either a significant market downturn or social unrest within the next year. On a recent episode of his Prof G Markets podcast, Galloway stated that the ongoing surge in stocks driven by AI is not sustainable, noting that the "Magnificent 7" tech giants—Alphabet,
Galloway's warnings echo those of NYU finance professor Aswath Damodaran, who has advised investors to look at unconventional assets such as baseball cards to help protect their investments. Damodaran, recognized for his prudent valuation strategies,
These cautions come as anxiety grows in the financial sector.
Despite the negative outlook, AI advocates remain optimistic. Bill Ford, CEO of General Atlantic, and Philippe Laffont of Coatue Management—who oversee $118 billion and $71 billion in assets, respectively—
As markets fluctuate, alternative assets are becoming more popular.
The discussion about AI's economic impact also touches on regulatory and ethical issues.
As these challenges unfold, the warnings from Galloway and Damodaran highlight a broader change in investor attitudes. With
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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