The Economy's Future Is Being Written Today

I follow the Nobel Prize awards like my own personal Super Bowl...

And I noticed something unusual about this year's winners.

The 2025 Nobel Prize in Economics was handed out just a few weeks ago. But it wasn't simply a nod to academia, like many before.

It was a mirror of the market.

Joel Mokyr, Philippe Aghion, and Peter Howitt received the prize for their work on "creative destruction." Said another way, they're interested in the ways that growth depends on dismantling the old to make room for the new.

It's a timely reminder that innovation is rarely incremental. It's a churn... a cycle of disruption and rebirth.

And thanks to AI, that cycle is accelerating faster than ever.

We're seeing it in boardrooms, research-and-development labs, and earnings calls...

Big companies are gutting their legacy operations to fund the future... even when those old cash cows are still making money.

They know the payoff will come from what's next, not what's now. AI-focused giants are pulling ahead fast.

And this observation goes hand in hand with the trio’s research. They proposed that economic growth stems from innovation cycles... each one wiping out the last.

In their model, new technologies don't add to existing systems. They replace them.

Creative destruction can't just be an academic theory for today's businesses. It's a survival instinct.

AI is speeding up the replacement cycle dramatically. Large language models and machine-learning tools aren't just improving processes. They're collapsing timelines... and rendering entire categories of human labor obsolete.

That's a feature, not a bug.

Companies that act on this trend are being rewarded...

Take a look at the table below. It shows the top 20 global companies by market cap in 1989... 2021... and today.

And as you can see, today's top players are much more AI-focused than ever before.

Check it out...

Chipmaker Nvidia (NVDA) has jumped several spots, fueled by its leadership in the graphics processing units that power AI infrastructure.

Software giant Microsoft (MSFT) is now in the top two. It's embedding AI into everything from its Office productivity suite to its Azure cloud-computing platform.

Google parent Alphabet (GOOGL) hopped one spot higher as it ramps up AI integration across its search, cloud, and advertising products.

Tech was already dominant back in 2021. Now, AI-forward tech is beating out everything else.

This is creative destruction in motion...

The companies rising to the top – and staying there – are the ones making bold moves.

They're shedding the parts of their businesses that no longer serve them... even when those parts are still making money. They're using AI to build new advantages, new profit engines, and new relevance.

And by embracing the future, they're betting against complacency.

The market is no longer rewarding efficiency or scale alone. It's rewarding the willingness to destroy what worked yesterday... in order to build what will win tomorrow.

Regards,

Joel Litman
November 10, 2025