Luxury Shines Bright as Tech Stocks Lose Luster

French luxury goods companies have outperformed US tech stocks over the past few decades in terms of profit growth, stock performance, and total returns.

Luxury brands have great pricing power - they can raise prices without denting demand, which increases profitability. Their brand prestige builds over decades, creating a "moat".

AI may erode the winner-takes-all network effects of Big Tech, making luxury brands relatively more attractive.

The growth slowdown in China poses a risk for luxury brands, but the bigger risk is if global wealth inequality stops widening.

Generative AI may hollow out middle-income jobs while boosting the super-wealthy, so luxury brands could be a way to invest in AI's impact.