A flash from the past, and some FT columnists are having too much fun.

So apparently, before Mag7 was a designation of large stock market equities, it was a 1960s movie about a Mexican village:

a band of gunslingers saves a Mexican village from bandits and, along the way, teaches the villagers how to fight back. What makes the ending so poignant is that the heroes have rendered themselves redundant. The villagers no longer need outsiders. So the men ride away, realising the world has moved on because they succeeded.

"Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla have dominated the stock market over the past decade, but could now plausibly be usurped by the “Three AImigos” — OpenAI, Anthropic and SpaceX.""Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla have dominated the stock market over the past decade, but could now plausibly be usurped by the “Three AImigos” — OpenAI, Anthropic and SpaceX."

With these IPOs, the Three AImigos are charging into the public markets, likely dominating investor interest much as they have in the private markets for the last few years.

Financial journalists do like their (stupid?) abbreviations (e.g., #1435777) so here we are.

The question now is what happens to the Mag7, which hitherto have largely basked in reflected glory as “AI-adjacent” names and have often acted as a proxy trade for the Three AImigos. The Mag7’s returns have been phenomenal in recent years, and now account for roughly a third of the S&P 500 by market cap.

Given the AImigos storm, what's gonna happen to the Mag7? Some are the same firms; some have cross-ownerships (i.e., Alphabet -> Anthropic and SpaceX; Microsoft -> OpenAI)

Also, no point in going public anymore.

There’s also a broader implication. The rise of the Three AImigos not only poses a potential threat to the Mag7, but also reflects a deeper change in how capital markets work. For much of the last century, public markets provided the venue for ambitious companies to raise capital. Today, the most valuable companies spend their formative years in private markets, growing by raising institutional capital in successive rounds long before public investors ever get access.

This dynamic affects many of the 32,000 companies estimated to be held by private equity funds and the over 1,700 venture-backed “unicorns” unlikely to ever reach mega-cap status.

Most of the value accrues privately. Public markets, and their index-fund DCAing and retirement funds (fuck the boomers...), provide the ultimate bagholders. The boomers will be (insufficiently) fucked.

"Like Yul Brynner and Steve McQueen at the end of the film, the Mag7 armed the villagers — and now the villagers can flourish on their own. The companies that may challenge their dominance are products of their own success.""Like Yul Brynner and Steve McQueen at the end of the film, the Mag7 armed the villagers — and now the villagers can flourish on their own. The companies that may challenge their dominance are products of their own success."

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