AI Reduces Valuations Across Software And Chips

On December 7, 2025 the author recommended market weighting rather than overweighting the Magnificent-7 after their combined S&P 500 market-cap share fell from 46.7% on November 5, 2025 to 43.9% by Monday. Despite forward earnings rising to a record 39.8%, the combined forward P/E dropped from 28.9 to 24.3, reflecting AI-driven competition and investor multiple compression across software and chips.