Ed Yardeni says AI is turning the Magnificent Seven from a collection of dominant, insulated businesses into direct competitors.
In a new interview on CNBC, the veteran strategist says the largest US technology companies are no longer protected by the same moats that once allowed them to prosper independently.
“Well, I think the Magnificent Seven, I think I previously made an analogy with the Game of Thrones, where the Seven Independent Kingdoms had their moats around them, and they were happy, prospering with their unique businesses. But AI has forced them to compete with one another. And so it’s become a much more competitive game. And I think that is going to start to narrow some of their profit margins.”
According to Yardeni, the competitive pressure means investors may be overestimating how much of AI’s long-term upside will accrue to the largest technology firms.
“And get people to understand that the real beneficiaries of AI are going to be what I call the impressive 493.”
Turning to monetary conditions, Yardeni says the Federal Reserve appears on track to lower rates further, which he thinks will boost risk assets.
“But the Fed has this notion that we have to get to 3% sometime in the foreseeable future. Then I think a lot of that liquidity, a lot of that stimulus will go into the financial assets and precious metals.”
He points to gold as a prime beneficiary of those flows, with the S&P 500 following suit.
“Since the beginning of the year, I’ve been talking about getting to $4,000 on the price of gold. It was $3,000 at the beginning of the year. I thought $4,000 by the end of the year. And here we are at $4,500. I thought $5,000 by the end of next year. Now I’m thinking maybe I’m going to have to raise that number. And I’m still thinking $10,000 by the end of the decade, which is actually when I also think the S&P will get to that level. So 10,000 for both by the end of the decade.”
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