indigo: Profit margins of non-Mag 7 S&P 500 companies have not risen in a decade
indigo pointed out that the profit margins of the 493 companies in the S&P 500 excluding the Mag 7 have barely risen since 2015, with growth being captured by the leading companies. He believes that the leading companies monopolize computing power, talent, and capital, and reinvest their profits into computing power and R&D, forming an accelerating cycle; after new companies such as Anthropic go public, the Mag 7 may expand into a Mag 8 or Mag 10. He judges that companies unrelated to AI will find it hard to rise further unless their corporate structures are transformed by AI.
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In the S&P 500, the profit margins of the 493 companies other than the Mag 7 have barely risen from 2015 to now! All the growth has been captured by the top players. Because they monopolize computing power, talent, and capital, and reinvest their profits into computing power and R&D, their intelligence keeps improving and the cycle spins faster. Once new companies like Anthropic go public, the Mag 7 will become the Mag 8, the Mag 10 👀 Those outside the cycle will have a hard time; countries that rely on individual taxes and financing to keep going are also weakening, and the room to catch up is getting narrower and narrower.
This is only one line of reasoning; innovation won't disappear, but the direction is already clear: companies unrelated to AI will find it hard to rise further unless their corporate structures are truly transformed by AI. But we don't want the end result to be a handful of companies controlling more and more resources 🤔 — from INDIGO's October month-end livestream