AI Has Driven 60% of Market Returns Since 2023

Most of the Magnificent Seven reported earnings last week, giving investors a closer look at the scale of AI investment. 

Already, spending on AI is outpacing consumer spending as the main driver of U.S. GDP growth. In the markets, 50%–60% of equity returns have been generated by AI-related stocks since 2023.

Microsoft beat expectations on both the top and bottom lines, fueled by 39% cloud growth. 

For the first time, it revealed the size of its Azure public cloud business, now pulling in over $75 billion in annual revenue, more than Boeing or Morgan Stanley. Shares jumped more than 7%, and it briefly became the second company to hit a $4 trillion market cap.

Meta also impressed, with earnings and guidance that topped estimates. Shares surged more than 10% after CEO Mark Zuckerberg said the company’s AI tools were increasing time spent across its apps, and driving major efficiency gains in its ad business. Family of apps users grew by 6% year over year. 

Ironically, the most sought-after resource in the race for artificial intelligence appears to be human intelligence. Meta’s Superintelligence team has made headlines for offering eye-popping sums for AI talent, and Zuckerberg said hiring-related compensation will be the company’s second-largest driver of capex growth.

Amazon beat expectations as well, but AWS’s 18% revenue growth lagged behind Microsoft’s and Google’s Cloud offerings. Its operating income forecast for the current quarter fell short of analyst consensus, sending shares down more than 7% after hours.

Apple posted stronger-than-expected iPhone sales as U.S. buyers raced to beat possible tariff-driven price hikes. It notched its best quarterly revenue growth since late 2021, with China sales up 4% after a stretch of declines. CEO Tim Cook said tariffs will cost the company an estimated $1.1 billion this quarter. Shares rose roughly 3%.

I feel like there’s two economies right now: the Magnificent 7, and everyone else. If the Magnificent 7 were a country, it would have the third-largest GDP, behind the U.S. and China. 

Part of what’s driving this is policy. The “Big Beautiful Bill” lets companies expense 100% of investments immediately, which makes big spending cheaper. Combine that with the lowest corporate tax rates since 1939, and the result is a system that disproportionately benefits the biggest, most profitable companies.

The tariffs are another transfer from 493 companies to the Magnificent 7. GM and other great American companies that make physical goods are in a state of paralysis right now, losing billions, but the tech guys are fine. 

America has always been good at helping the winners. We’ve been much worse at helping the people disruption leaves behind.

President Trump announced a series of trade agreements ahead of his self-imposed August 1 deadline, the date by which countries were told they must strike a deal with the U.S. or face steep new tariffs.

Only one agreement, with the U.K., is actually signed. The remaining “agreements” are not legally binding, and the details are already unraveling:

A European Commission official said that the bloc’s $600 billion investment depends on private companies — something Brussels doesn’t control. 

Experts say the EU’s $750 billion spending promise on U.S. oil and gas is completely unrealistic; meeting that target would require the EU to triple its American energy imports.

Trump said Japan would invest $550 billion in the U.S., but Japanese officials clarified only 1%–2% would be direct investment, with loans making up the difference.

Then, on the eve of what was supposedly a firm deadline for tariff negotiations, Trump issued another executive order that imposed new tariffs but delayed their start by a week. 

Under the new rules, most imports into the U.S. will see tariff hikes, even from countries that had already agreed to trade deals. The headline tariff rate remains 10% — but only for countries where the U.S. runs a trade surplus. Countries with a trade deficit, about 40 in total, will face a new baseline of 15%.

Canadian goods not exempt under the United States-Mexico-Canada Agreement will now face a 35% tariff (up from 25%). Mexico agreed to extend its 25% rate for 90 more days, and products rerouted through third parties to mask their origin, mainly Chinese exports, will face a new 40% tariff.

These deals aren’t real deals. But some of my MAGA-leaning acquaintances and online commentators have claimed that this criticism is just Trump Derangement Syndrome. Their argument is basically, why are you so fixated on getting a signature? 

This isn’t TDS. This is about facts. The reason a signature matters is because, time and again, we’ve seen what happens when there isn’t one: The deal never materializes. We’ve covered this repeatedly.

This isn’t about hating Trump. It’s about recognizing that without a signed agreement, all you have is a headline. And a headline isn’t a deal.

Investment banks benefit from volatility because it drives more trading activity and increases commissions. Consulting firms, by contrast, benefit from insecurity and major shifts in the marketplace. When the environment becomes unstable, CEOs are suddenly flooded with questions they cannot answer on their own. That is when consultants step in. Even if the guidance is imperfect, it provides leadership with a third party to blame if things go sideways. 

The combination of tariffs, AI disruption, and supply chain instability has created the ideal environment for consulting firms. 

After Trump’s April tariff announcement, consultancies, including KPMG, McKinsey, and BCG all saw a bump in demand, and total job postings for management consulting positions increased 60% in the first half of this year. 

It’s a great time to have a consulting business, but the next couple of years will be a tough time to be a consultant. The research, the analysis, the slide decks — what used to take six people can now be done with three AI-enabled workers. 

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The autonomous wars are heating up. Uber just announced plans to deploy 20,000 robotaxis over the next six years. It’s investing hundreds of millions in EV maker Lucid and autonomous tech startup Nuro. The vehicles will be Lucid’s new Gravity SUV, powered by Nuro’s software, and available exclusively through the Uber app.

Meanwhile, Waymo plans to launch a robotaxi service in Dallas next year via a new multiyear deal with Avis. While Uber and Waymo still partner in Phoenix, Austin, Texas and Atlanta, this move signals a strategic shift. In Dallas, Waymo will own the fleet, and bookings will happen directly through the Waymo One app. Uber shares fell nearly 4% on the news.

The core question in autonomous driving is: Should companies go fully vertical, and if so, how? Uber once considered building its own AVs but has shifted to being a platform operator. Waymo, initially focused on hardware and software, now appears intent on owning the end-user experience too. Tesla is going fully vertical: build the car, operate the car, run the network.

At Prof G Media, we see two competing playbooks emerging:

The Netflix Strategy — Start with distribution, then move upstream.
Uber fits this mold. Like Netflix licensing content in its early streaming days, Uber has signed at least 10 AV partnerships since mid-2023, outsourcing the expensive hardware stack while focusing on being the go-to platform. 

Netflix eventually started producing its own content, and Uber may need to do the same with autonomous vehicles. But waiting might be the smarter move. According to Wright’s Law, technology costs decline as production scales, thanks to process improvements and the ability of latecomers to copy what works.

The Apple Strategy — Start with the product, then gradually build the distribution network.

Waymo is in this camp. It’s built the core AV technology and is now slowly ramping up its own distribution. 

Partnering with ride-hailers like Uber makes sense: They help manage idle time and cost. (Uber’s surge pricing dynamically matches supply to demand). Going solo risks overspending on vehicles that sit unused off-peak. 

Tesla is pursuing ... the Tesla Strategy.

Last week, it quietly launched a ride-hailing service in the Bay Area — essentially Uber, but with Teslas. Notably, there was no mention of robotaxis. That tracks: Tesla still hasn’t secured a permit to operate them in California.

Its robotaxi rollout in Austin has been rocky. One test vehicle hit a parked car, and other videos show basic issues like ignoring traffic laws. 

One of the seminal business professors in the history of academia, C. K. Prahalad, came up with this concept of core competence. That is, find out what you're really good at, focus on that, and then outsource or just aim to be industry average at everything else.  

That model no longer holds. Companies aiming to be worth over $100 billion almost always go vertical. Retailers like Costco developed their own private label, Walmart built Sam’s Club, and brands like JCPenney launched in-house lines.

Effectively once you get above a certain point it’s not if you go vertical — it’s when. The advantage lies in controlling the customer relationship. Uber, for example, has a major edge because users are already familiar with the app and payment system. That kind of embedded access creates real power. The brand that maintains custody of the consumer holds the strongest position in the value chain.

Dubai has long tried to position itself as a global hub for luxury, taste, and culture. Turns out, it didn’t need another skyscraper. It needed chocolate.

Dubai chocolate went viral in December 2023, when a food influencer named Maria Vehera posted a TikTok biting into a bright-green-filled chocolate from boutique chocolatier FIX. The clip racked up 122 million views, and economic ripple effects followed: 

The bar is practically made for virality. Its rich brown exterior hides a shocking green pistachio core, creating a visual hook. It has a satisfying crack when bitten — ASMR gold. And the texture contrast of smooth cream and crunchy knafeh is a tactile reward. Its success mirrored other sensory-first products like dalgona coffee during COVID and Hailey Bieber’s Erewhon smoothie — not made to be eaten but to be watched.

Why does sensory content dominate TikTok? Because ASMR isn’t just internet weirdness — it’s stress relief for the smartphone generation. 

Artificial scarcity also helped boost demand. FIX limited production to just 500 bars a day. This created a second wave of content, as people documented failed attempts to buy it, compared dupes, and filmed taste tests.

Dupes often get a bad rap, but research suggests they can actually boost sales of the original by serving as indirect marketing and increasing product awareness. Imitation breeds aspiration.

What makes Dubai chocolate so effective is that it works on every layer of the modern attention stack. It’s visually arresting, psychologically rewarding, and, crucially, it gives people a reason to post. The unboxing video, the crack of the shell, the bright-green reveal — the product isn’t the chocolate bar, it’s the post-worthy experience it creates. I tried it — and beneath all the TikTok theatrics, it’s actually delicious: rich, nutty, and just salty enough to cut the sweetness. It earns the hype.

Ft. Ed, who breaks down what the firing of the top labor stats official really means — and why the data might be more political than you think. Watch his MSNBC segment here.