062826-Mag7.pdf
Number of Pages: 32
Unless otherwise noted, information as of June 2026.
Proprietary - Not for distribution, in whole or in part, without the express written consent of Apollo Global Management, Inc.
Mag 7 starting to underperform:
Markets rotating toward quality and free cash flow
June 2026
Torsten Slok, Rajvi Shah, and Shruti Galwankar
tslok@apollo.com
Apollo Global Management 2
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> 23Private and Confidential
Recent performance of the Mag 7 Recent performance of the Mag 7 Mag 7 share of S&P 500 market cap Some divergence in performance inside the Mag 7 in 2025 but recently they have all been going down Performance of the Mag 7 versus the S&P 493 Hyperscaler free cash flow coming down Profit margins not moving up for the S&P 493 10 Source: Factset , Apollo Chief Economist
Earnings growth converging between the Mag 7 and the S&P 493
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-16
34 37
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47
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-3
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11
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15
-20
-10
0
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60
2021 2022 2023 2024 2025 2026 2027
% YoY Earnings growth
Mag 7 S&P 493 Source: Bloomberg, Apollo Chief Economist
Hyperscaler capex as a share of operating cash flow
0%
10%
20%
30%
40%
50%
60%
70%
80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
> Dec-12 > Mar-13 > Jun-13 > Sep-13 > Dec-13 > Mar-14 > Jun-14 > Sep-14 > Dec-14 > Mar-15 > Jun-15 > Sep-15 > Dec-15 > Mar-16 > Jun-16 > Sep-16 > Dec-16 > Mar-17 > Jun-17 > Sep-17 > Dec-17 > Mar-18 > Jun-18 > Sep-18 > Dec-18 > Mar-19 > Jun-19 > Sep-19 > Dec-19 > Mar-20 > Jun-20 > Sep-20 > Dec-20 > Mar-21 > Jun-21 > Sep-21 > Dec-21 > Mar-22 > Jun-22 > Sep-22 > Dec-22 > Mar-23 > Jun-23 > Sep-23 > Dec-23 > Mar-24 > Jun-24 > Sep-24 > Dec-24 > Mar-25 > Jun-25 > Sep-25 > Dec-25 > Mar-26
%% Amazon, Google, Microsoft, Meta and Oracle (hyperscalers) capital expenditure as a percentage of
operating cash flow Performance of S&P 500 versus S&P 500 excluding AI enablers Semiconductors account for 19% of the S&P 500 Mag 7 forward P/E ratio versus S&P 493 P/E ratio Mag 7 P/E premium at the lowest level in more than a decade Source: Bloomberg, Apollo Chief Economist
Mag 7 market cap compared with the market cap of stock markets in Japan, Can ada, and UK
Apple UK
Microsoft
Canada
Amazon
NVIDIA
Meta
Tesla
Japan
0
5
10
15
20
25
Magnificent 7 market cap Japan, UK and Canada equity market size
$trn Magnificent 7 market cap vs size of equity market of Canada, UK and Japan Source: Bloomberg, Apollo Chief Economist
Comparing the NVIDIA market cap with the market cap of selected stock markets
4.7
8.7
4.4
3.9
3.5
3.0
1.2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
NVIDIA Japan Canada UK France Germany Italy
$trn NVIDIA vs developed countries market cap 18 Private and Confidential
Token costs, token usage, and data center construction Source: Anthropic API Docs, OpenAI Pricing, Google AI Pricing, DeepSeek API Docs, OpenRouter , aipricing.guru , Apollo Chief Economist. Note: Data as of June 26, 2026
Comparing token costs across large language models
0
10
20
30
40
50
60
Claude Fable 5 GPT-5.5 Claude Opus 4.8 GPT-5.4 Gemini 3.5 Flash V4 Pro
$/million tokens AI model pricing Source: LLM Rankings | OpenRouter , Apollo Chief Economist
Monthly token usage by AI models
0
2
4
6
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18
trillion tokens Monthly token usage by AI models Note: The figure is a company's total AI spend divided by headcount, expressed per employee. Ramp's index breaks business spe nd into subscriptions vs. coding agents vs. tokens and APIs. Tokens are just one of three
components. The $7,449 covers subscriptions, API access, usage costs, and more, captured from corporate -card and invoice -based p ayments. Source: Ramp AI Index , Apollo Chief Economist
Monthly corporate AI spend per employee, top vs. median spenders
$7449
$611
$11
0
1000
2000
3000
4000
5000
6000
7000
8000
Top 1% Top 10% Median
$ Companies’ AI costs, ranked by spending intensity, June 2026 Different interest rate sensitivity for office construction and data center construction
> The Fed starts > raising interest > rates
Different interest rate sensitivity for office and data centers
> The Fed starts > raising interest > rates
Still strong growth in data center construction Source: Americas -AI -Surge -Powering -Growth -in -Every -State.pdf , Data Centers – Database , Apollo Chief Economist
The number of data centers in the US
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Existing Announced/Under construction
Count Number of data centers in the US 26 Private and Confidential
Valuations Cyclically adjusted P/E ratio near all -time highs Source: Bloomberg, Apollo Chief Economist.
Software trades at its lowest relative valuation in years
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70
10
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70
> Jan-21 > Mar-21 > May-21 > Jul-21 > Sep-21 > Nov-21 > Jan-22 > Mar-22 > May-22 > Jul-22 > Sep-22 > Nov-22 > Jan-23 > Mar-23 > May-23 > Jul-23 > Sep-23 > Nov-23 > Jan-24 > Mar-24 > May-24 > Jul-24 > Sep-24 > Nov-24 > Jan-25 > Mar-25 > May-25 > Jul-25 > Sep-25 > Nov-25 > Jan-26 > Mar-26 > May-26
Ratio Ratio Forward P/E (NTM): Software vs. S&P 500
IGV ishares tech-software ETF S&P 500 Index 29 Private and Confidential
Investment implications Source Bloomberg, Apollo Chief Economist
The ten biggest companies in the S&P 500 make up more than 40 % of the index
42%
58%
Share of top 10 companies in S&P 500
Top 10 Rest of S&P 500 Source: Goldman Sachs, JP Morgan, Bloomberg, Crunchbase, Apollo Analysts, Apollo Chief Economist.
AI-linked issuance is redefining credit markets and VC
0
50
100
150
200
250
300
350
0
50
100
150
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IG VC HY
YTD net issuance ($B) YTD net issuance split: AI vs. Non -AI by channel
AI issuance Non-AI issuance
YTD net issuance ($B)
49 % AI
51% non -AI
13% non -AI
87% AI
38% AI
62% non -AI 32 32
Torsten Slok joined Apollo in August 2020 as Chief Economist and he leads Apollo's
macroeconomic and market analysis across
the platform. Prior to joining, Mr. Slok worked for 15 years as Chief Economist at Deutsche Bank where his team was top ranked in the annual
Institutional Investor survey for a decade. Prior
to joining Deutsche Bank Mr. Slok worked at the IMF in Washington, DC and at the OECD in Paris. Mr. Slok has a Ph.D . in Economics and has studied at the University of Copenhagen and
Princeton University.
Torsten Slok, Ph.D.
Chief Economist
Apollo Global Management
tslok@apollo.com