[aiforecastthway]

A lot of the comments here are talking about startups. But the chart in the article is the forward P/E of the top 10 companies in the S&P.

For reference, those 10 companies are: Nvidia, Microsoft, Apple, Amazon, Meta, Braodcom, Alphabet (Class A), Alphabet again (Class C), Tesla, Berkshire.

This isn't a pets.com situation.

These companies are ENORMOUS cash engines with incredibly well-proven moats operating in an extremely monopoly-friendly political climate. Nothing like this existed in the 90s. Microsoft, but anti-trust still had some teeth.

The author makes a comparison between these companies and the rest of corporate America, arguing (implicitly) that the forward P/E of these ten symbols is too high relative to the rest of the S&P 500 index.

So let's look at the flip side. Many of the other companies in the S&P are vulnerable to these exact players' moats and pricing power. It's a zero-sum game and the winner is clear, so of course the winner's P/E looks really high compared to the expected loser.

Every single one of them has an AWS bill. Every single one of them has a big Windows/Office install base. Every single one of them probably has a huge apple install base. Every single one of them needs to pay to play in the App Store.

And many of them are also in the unenviable position of being on the losing side of an unfair competition in their actual core business. Walmart/HD/Coca-Cola vs Amazon. IBM/Oracle vs AWS. Or other complicated market dynamics that pose only upside to the big guys and potential downside to the rest (Biotechs vs Amazon Pharmacy).

The remainders are competing margins away from one another, are vulnerable to disruption of mid-market non-S&P players (or similarly sized companies that just aren't on the public markets -- see the huge size of privacy capital relative to the 90s). Some also face significant tariff risk. Think banks, consumer goods.

What percent of the difference in P/Es between the best and rest is justifiable on the thesis that we are entering a multi-decade period of (1) tech feudalism and (2) unpredictable populist fits that wreck havoc on everyone except the tippy top of the echelon who can blow enough cash to control the narrative?