SAN FRANCISCO (KRON) -- Despite massive investments across all of corporate America and widespread media hype about the technology, artificial intelligence has delivered zero payoff for anyone outside of tech according to a leading economist. That's according to Torsten Slok, chief economist at Apollo Global Management, who argues that AI's benefits remain concentrated among companies developing and selling the technology.
In a post published Saturday on the Apollo website, Slok wrote that while revenue per worker is rising for the companies behind the "Magnificent 7" stocks -- Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla -- it remains flat for the rest of the S&P 500.
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"Profit margins are rising for the Mag 7 but are flat for the S&P 493," Slok wrote, adding that "there are still no signs of AI boosting productivity growth."
With no noticeable impact to the bottom line, mainstream corporate America is starting to pull back on investing the technology, Slok said. Companies are "starting to view token spending not as a source of growth but as a cost center that weighs on margins," he added.
"VC-backed companies are spending more and more on tokens, but mainstream corporate America does not need the latest model and is unwilling to pay for it. As long as agentic AI and token spending are confined to a small part of the economy, the macroeconomic effects of AI will be very limited," Slok wrote.
With AI giant Anthropic having just filed for its IPO, Slok questioned whether "mainstream corporate America can turn increasingly cheap intelligence into higher revenue growth and higher profit margins," calling it "harder than it sounds."
"AI may be a great calculator, but in business, intelligence is mostly judgement," he continued. "Judgement depends on context, and the answer varies with which human or which model you ask.
"Perhaps most importantly, AI does not understand accountability, trust, culture, unwritten rules, ethical trade-offs or fairness, all of which shape reputational risk and ultimately drive revenue growth and profit margins," he added.
For Slok, "the bottom line" for AI will be decided by the S&P 493 -- not the Mag 7. And as he sees it, "so far, there is no evidence that revenue growth or margins are improving outside the tech sector."
Unease around AI has unsettled financial markets in the final weeks leading up to the midterm elections. A public pushback over data centers, high-profile incidents of AI agents going rogue, and concerns over AI-driven job cuts have all contributed to the general public cooling on the technology, despite the red-hot tech stocks driving a continuous market boom for much of the year.
