I Just Revealed My Current Portfolio…
TL;DR
Anthony Pompliano argues that MAG 7 stocks have sold off due to overblown fears about inflation and AI infrastructure spending, creating an attractive entry point for long-term investors. He believes inflation will ease in late 2025, AI demand remains robust despite efficiency improvements, and quality businesses should be bought when they temporarily fall out of favor.
💻 Big Tech Valuation Reset 3 insights
MAG 7 oversold on inflation fears
Long-duration technology assets sold off due to energy-driven inflation concerns, despite the group being up 18% over the past year while trading at compressed multiples.
Google trades at discount to Apple
Google currently trades cheaper than Apple despite growing faster, illustrating the market dislocation caused by AI capex anxiety rather than fundamental deterioration.
Quality businesses at stale prices
Investors can buy the same MAG 7 companies at prices from six months ago despite receiving an additional half-year of growth and profitability data.
🤖 AI Infrastructure Reality 3 insights
Capex guidance likely overstated
Companies will probably spend significantly less on AI infrastructure than projected, preserving free cash flow while still meeting demand.
Token efficiency paradox
While customers optimize to reduce token usage per query, total addressable market expansion means AI providers maintain high revenue growth despite efficiency gains.
Supply constraints persist
Persistent shortages of data center power, chips, and compute capacity indicate demand remains strong rather than indicating an overbuilt bubble.
📉 Inflation Outlook 3 insights
Energy drove 60% of inflation spike
Recent inflation increases were primarily caused by temporary energy price movements from geopolitical events, not structural economic factors.
Deflationary forces dominate
Tariffs and short-term supply shocks will not create sustained inflation like 2020 monetary policy, with inflation likely peaking and declining in Q3/Q4 2025.
Multiple expansion catalyst
As inflation concerns fade and interest rate fears subside, MAG 7 valuation multiples should expand from current attractive levels.
🎯 Investment Philosophy 2 insights
Volatility creates asymmetry
Assets falling out of favor offer greater future return potential than crowded popular trades, making temporary dislocations optimal entry points.
Margins justify higher valuations
S&P 500 profit margins have increased 58% since 2011, making historical valuation comparisons to the dot-com era irrelevant for modern digital businesses.
Bottom Line
Buy high-quality technology companies during temporary dislocations caused by misplaced inflation and AI capex fears, focusing on businesses with durable competitive advantages trading at discounted multiples.
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