Aswath Damodaran, professor at NYU, warns of a shakeout among smaller AI stocks as Big Tech’s robust cash flows protect the Magnificent Seven giants from market turbulence. The professor highlights the structural advantage enjoyed by large technology companies during an AI sector consolidation. Smaller AI companies lack the financial cushioning of their larger counterparts, making them vulnerable to market shifts. Investors should monitor smaller AI stocks closely as the sector undergoes potential restructuring.
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