SpaceX shares jumped nearly 20% on their trading debut Friday, marking the largest IPO ever by valuation and share count. The offering raised questions about market pricing given the massive $16bn in passive fund demand expected within days, not to mention the $1.75tn valuation slapped on a cash-burning venture.

Up to 911 million insider shares could hit the market after the June quarter earnings report, potentially overwhelming the 555 million shares initially sold. This supply overhang, combined with index funds chasing the stock, creates a complex dynamic where early investors may profit from price squeezes even as fundamentals remain questionable.

The piece argues the Magnificent 7 investment theme has outlived its usefulness. While these seven megacaps once moved in lockstep, Nvidia has outperformed the group by nearly 500 percentage points since early 2023, while correlations among hyperscalers have collapsed from 0.6 to below 0.3. Apple increasingly sits apart from Microsoft, Alphabet, Amazon and Meta as it avoids data center capex wars.

Investors are finally distinguishing between companies rather than treating them as a single trade. The Mag 7 still comprises roughly a third of S&P 500 value, but diverging fundamentals suggest this monolithic approach to tech investing is ending. Market discernment, not groupthink, is taking hold.