Prof G Markets – Why Big Tech Is Losing to Boring Stocks Podcast: Prof G Markets
Host: Scott Galloway with Ed Elson
Date: February 23, 2026

Episode Overview

In this episode, Scott Galloway and Ed Elson dive into the shifting winds of the capital markets in early 2026. They discuss the surprise outperformance of so-called “boring” stocks like consumer staples, energy, and materials over the fallen tech giants, including the mega-cap “MAG7.” The hosts examine the roots and risks of this rapid rotation, challenge perceptions about safety and recession resilience, and unpack the growing political battle over wealth taxes. They close with an analysis of the rising backlash against AI as a political and economic force, and how these issues are reshaping investment narratives.

Key Topics & Discussion Points

1. The Rotation: Big Tech’s Decline and Boring Stocks' Surge

Timestamps: 05:34 – 23:43

• Market Dynamics for 2026

  • Investors are fleeing tech and AI stocks for consumer staples (up 14%), materials (up 18%), and energy (up 22%). MAG7 names are all down, erasing $1.5 trillion in market cap.
  • Ed celebrates his early call to diversify away from overheated tech and towards “boring” sectors, listing Walmart (+12%), Costco (+17%), Coca-Cola (+15%), and Johnson & Johnson (+18%) as key winners. [06:30]

• Why the Rotation?

  • Scott: “It appears that people are still pretty bullish on the market...it’s just been a rotation into other stocks. I almost think of it as sort of schmuck insurance.” [08:02]
  • Defensive names, once cheap, have now become expensive as money floods in. Ed notes: “Consumer staples...are now trading at 25 times earnings. That’s their highest multiple in decades.” [09:18]
  • The narrative has flipped: “Last year premiums were being placed on high-growth, AI-narrative companies. Now, boring stocks are getting the real premiums.” [10:18]

• Are Defensive Stocks Still Safe?

  • “These companies are good in their own right, but what’s driving their premium is essentially fears from AI.... I would argue these stocks are a little bit rich right now.” – Scott [11:37]
  • Both caution the “flight to safety” in staples may now be overdone; old winners (software/SaaS) could again offer value.

• Valuation Extremes & Contrarian Opportunity

  • Ed tracks technical indicators, noting “the RSI for software stocks was 18–oversold. Consumer staples is north of 70–overbought.” [12:40]
  • Scott: “If you look at enterprise software...these aren’t discretionary spends, they’re the nervous system of these companies...I don’t see any reason why these SaaS companies aren’t as recession proof as what we have come to believe are recession proof consumer staple stocks.” [19:29]

• Notable Quote:

  • “When wisdom becomes conventional, it's no longer wise.” – Scott Galloway [17:28]

2. Wealth Taxes: Debates, Backlash & Alternatives

Timestamps: 27:44 – 51:41

• Global Moves Toward Wealth Tax

  • France, Netherlands, and California all consider new wealth tax proposals. “Does a wealth tax actually make sense?” Ed asks. [27:44]

• Scott’s Critique

  • Acknowledges the top 1% don’t pay their fair share, thanks mainly to borrowing against appreciated assets and capital gains loopholes. [28:55]
  • “A wealth tax in sum does not work...You get into an enormous war...trying to figure out the value of these things.” [29:36]
  • Points to logistical nightmares: “How do you value a Picasso? Is it worth $3 million or $30 million?” [30:54]
  • Notes historical precedent: “Sixteen countries have had wealth taxes, all but three have repealed them.” [31:39]

• Ed’s Counterpoint

  • “That’s exactly what property taxes are... I don’t see any reason why the exact same thing shouldn’t apply to everything.” [33:29]
  • Agrees enforcement and tax flight are problems, citing billionaire relocation and potential legal battles. [36:06]

• Seeking Effective Solutions

  • Scott: “The net is to help address income inequality, raise the funds...There are much more pragmatic, enforceable, acceptable means of raising taxes on wealthy people.” [41:09]
  • Suggestions include ending carried interest, raising capital gains tax, and taxing borrowing against assets as a “taxable event.” [43:36]

• Notable Quotes:

  • “The closer you get to certainty, the more likely you are to be wrong.” – Scott Galloway [22:34]
  • “It is so obvious how self-interested you are with your motives here...what they need to get through their heads is that this train isn’t stopping.” – Ed [48:14]

3. AI’s Popularity Problem & Political Backlash

Timestamps: 54:52 – 66:20

• From Hype to Headache

  • AI is under fire across party lines, with politicians and grassroots groups concerned about energy demands, jobs, and local impacts of data centers. [54:52]
  • “It was a technological nerd bro conversation. It is now very quickly becoming a mainstream conversation.” – Ed [55:07]

• Critique of AI Founders

  • Scott is scathing: “I’m really sick of hearing all these quote unquote founders of AI...all of a sudden get very concerned about AI.... Well, you coded this peril. Any thoughts on how we uncode it, bitch?” [56:13–57:29]
  • Argues for taxing data centers, as their costs are being offloaded onto regular consumers: “Middle class households shouldn’t be subsidizing AI companies right now.” [58:27]

• Popularity Polls Show Weak Public Support

  • “Less than half of Americans say they like AI...less than a third of Americans say they trust AI.” – Ed [64:16]
  • AI is seen as inextricably linked with unpopular billionaires; public utility questionable, with utility bills rising and activist groups protesting.

• Investment Implications

  • “Go short direct AI-related companies...go long the companies under threat — the SaaS guys.” – Scott [66:20]

4. The Broader Picture & Week Ahead

Timestamps: 66:36 – 70:49

• Market Uncertainty

  • Multiple narratives now compete — flight to safety, AI as existential threat, macro uncertainty, confusion about what actually counts as safe.
  • Example: Warren Buffett sells Amazon, Ackman buys. “No one seems to agree on anything right now.” – Ed [20:21]

• War Watch

  • Scott closes with a geopolitical aside:
    • “We are so fucking bombing Iran...A two carrier battle group is not a show of force. It's literally a strike force...” [67:34]
    • Attributes political maneuvering for war to distract from domestic scandal, referencing US and UK divergences in elite accountability.

Memorable Quotes & Moments

• “The bigger story is just the amount of market cap that tech or AI related stocks has had and then kind of the SaaS apocalypse.” – Scott Galloway [08:02]
• “When a recession hits...companies don’t stop using Salesforce to manage their customer pipeline.” – Scott Galloway [18:41]
• “If you have Salesforce in your company or ServiceNow or...S&P or whatever it is, that shit is hard to rip out.” – Scott Galloway [19:42]
• “The net net here...the market is paying a 50%+ premium multiple for low growth, low margin, commoditized physical goods over high growth, high margin, sticky digital products...It’s mispricing.” – Scott Galloway [22:34]
• On AI founders: “Now that you’ve...sold them on a secondary market, all of a sudden get very concerned about A.I....You built this code.” – Scott Galloway [56:13]

Useful Timestamps

• Pet spending/Anecdotes: 01:42–02:58
• Market rotation & “boring stocks”: 05:34–23:43
• Wealth tax debate: 27:44–51:41
• AI backlash and market risk: 54:52–66:20
• Geopolitics/military predictions: 66:59–70:49

The Takeaway

2026's “safe” market play has now become the bubble. The mad dash from tech to “boring” names may have gone too far, setting up a value-contrarian case for beaten-down SaaS and software stocks. While politicians battle over (often symbolic) wealth taxes and the public mood sours toward billionaires and AI, investors are navigating one of the most narrative-confused markets in years. The smart play may be to zig where others are zagging — and keep one eye on D.C. and Main Street, not just the balance sheet.

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