For most of the past decade, the Magnificent Seven ruled technology like independent empires.
Alphabet Inc. (NASDAQ:GOOGL) dominated search, Microsoft Corp. (NYSE:MSFT) controlled enterprise software, Amazon.com Inc. (NASDAQ:AMNZ) led online retail and cloud infrastructure, Meta Platforms Inc. (NASDAQ:META) owned digital advertising, Apple Inc. (NASDAQ:AAPL) commanded smartphones, Tesla Inc. (NASDAQ:TSLA) reshaped electric vehicles, and Nvidia Corp. (NASDAQ:NVDA) supplied the chips that powered the entire ecosystem.
Each kingdom had deep moats. Competition existed, but rarely threatened the core franchise.
Margins were high, capital spending was manageable, and companies could return billions to shareholders while steadily expanding their reach.
That long summer is over.
“The arrival of generative AI is plunging the tech sector into the War of the Seven Kings,” veteran Wall Street strategist Ed Yardeni said on Monday.
Mag 7 Fortress Monopolies Are Now Cracking
According Yardeni, generative AI has blurred the lines that once separated these companies.
“These monopolies now are threatened by their fierce competition in the AI race,” Yardeni said in his latest note to clients.
What were once fortress monopolies in search, software, advertising, retail, devices, and chips are now under direct threat, often from one another.
Each firm is scrambling to build or deploy state-of-the-art large language models and AI chips, knowing that falling behind could mean losing relevance.
"Their new AI capabilities directly threaten one another's monopolies in one way or another," Yardeni said.
Distinct domains have collapsed into a single, competitive arena where borders no longer matter and every company is exposed.
"It is no longer enough to rule one domain," Yardeni warned. "One must rule them all or perish."
The result is rising pressure to spend more on capital and labor just to stay competitive.
The AI race has turned into what Yardeni describes as a classic prisoner's dilemma. Each company is forced to invest tens of billions of dollars, not only to grow, but to avoid being left behind.
This spending surge provides a short-term boost to "pick-and-shovel" suppliers like Nvidia, but it raises harder questions for the buyers. Returns on invested capital are uncertain, and the margin for error is shrinking as costs climb.
The Dragon At The Gates If Search
Yardeni also compares the AI race to Game of Thrones, calling Microsoft's partnership with OpenAI the first major escalation.
The move brought generative AI into Microsoft's products and challenged Google's long-held control of search.
"For the first time in 20 years, the loyalty of the Search Kingdom's subjects is being tested, as the chat
interface threatens to replace the blue link,” Yardeni added.
Nvidia's Power Equals Everyone Else's Discomfort
At the center of the battlefield also sits Nvidia, supplying the GPUs that every company needs to train and deploy AI models.
"Currently, Nvidia supplies the GPUs that every House needs to survive the winter," Yardeni wrote.
That dependence, however, has made the rest of the Magnificent Seven uneasy. Nvidia's margins function as a tax on the group, pushing Amazon, Google, and Microsoft to accelerate efforts to develop their own custom silicon to regain control of their infrastructure.
"This is no longer a battle for expansion," Yardeni said. "It is an existential battle for sovereignty."
What This Means For Investors
For investors, the takeaway from the War of the Seven Kings is clear.
The "peace dividend" of the past decade, which was characterized by strong margins, steady buybacks, and moderate capital spending, is now over.
"We are entering a period of heavy war spending," Yardeni wrote, as the Magnificent Seven burn through capital to stay in the race. While this is likely to compress profit margins, the broader economy could benefit.
Intense competition often pushes prices lower and accelerates innovation. So while the kings of the Magnificent Seven may bleed, the broader realm could benefit.
The War of the Seven Kings may ultimately spread productivity gains across the wider economy, helping sustain Yardeni's "Roaring 2020s" even as the tech giants battle for control of the throne.
Read Next:
Photo: Shutterstock
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
