Bloomberg Intelligence: the Magnificent Seven's combined profit growth is projected to slow from 34% in 2024 to 18% in 2025, or just 3% if Nvidia is excluded
www.wheresyoured.at/rotcombubble/ [embedded post] Mastodon: Dare Obasanjo / @carnage4life@mas.to : Magnificent 7 (FAANG + Nvidia + Microsoft + Tesla - Netflix) profit growth is expected to slow from 34% to 18% in 2025. If you exclude Nvidia then it would only be 3%. — That giant sucking sound you hear is all the profits in big tech flowing to Nvidia. — https://www.bloomberg.com/... … Forums: r/ProductManagement : Are they starting to realize all that money being poured into AI isn't giving a return?
Context & Ripple Effects
The group’s earlier market gains were tied to AI optimism, with the seven stocks substantially outperforming the broader market in 2023 as AI optimism lifted the group’s shares. This forecast recasts that collective narrative as an increasingly Nvidia-led earnings story.
Nvidia had already shown relative resilience through data-center demand during a broader revenue decline when its data-center revenue still grew. The projected gap now puts a concrete boundary around how much of the group’s 2025 profit expansion comes from one company.
First-order effects
- Nvidia becomes the decisive contributor to the Magnificent Seven’s projected 2025 profit growth: excluding it, the group’s expected growth falls from 18% to 3%.
- The other six companies face a much weaker combined earnings-growth comparison, while Bloomberg Intelligence’s forecast makes concentration within the group’s profits more visible to investors.
Second-order effects
- Investors assessing “Big Tech” as a single AI trade may need to separate Nvidia’s earnings exposure from that of platform, cloud, consumer-device, and EV peers.
- The six non-Nvidia companies face greater pressure to show that AI spending can translate into profit growth rather than primarily supporting demand for Nvidia’s infrastructure.
Third-order effects
- If this divergence persists, the AI cycle’s near-term financial gains may remain concentrated in infrastructure suppliers rather than broadly distributed among the largest technology platforms.
- That concentration could shift the market’s focus from aggregate AI enthusiasm toward which companies capture durable returns after funding compute and deployment.
The trend: AI-driven profit growth is becoming more concentrated in the suppliers of scarce infrastructure, forcing a distinction between AI investment beneficiaries and AI return recipients.