AI’s boost to the U.S. economy is nearing its peak, Goldman says, as Apollo finds ‘zero financial payoff’ outside Big Tech

Goldman Sachs chief economist Jan Hatzius believes that the economic benefits of AI are about to peak, while Apollo chief economist Torsten Slok claims that the technology has yet to deliver any financial returns for corporations outside of tech. According to Slok, "despite massive investments and widespread hype around artificial intelligence, the technology has delivered zero financial payoff to corporate America outside of tech."

Hatzius predicts that the growth momentum from the AI boom will reach its peak in late 2026 or early 2027, before concerns over the sustainability of AI investment intensify. He attributes the recent rise in long-term interest rates, as well as gasoline, diesel, jet fuel, and European and Asian natural gas prices, to "AI-linked borrowing." Slok estimates that this rise in interest rates will subtract a cumulative 0.6% from GDP if it persists.

While AI investment is still growing rapidly, Slok expects the increase to slow down as a percentage of GDP over the next year. This, combined with the fading boost from the 2021 increase in U.S. depreciation allowances, will negatively impact capital spending growth, especially in the U.S. The AI "wealth effect" has added 0.4 percentage points to U.S. consumer spending growth over the past year, or 0.25% of GDP. However, Slok expects this to decline in the coming year.

The concentration of AI's economic benefits has been limited to the Magnificent 7, or the seven largest technology companies in the S&P 500. Inflation-adjusted revenue per worker and profit margins are rising for these companies, while flat for the rest of the S&P 500, which Slok calls the S&P 493. Productivity growth shows no AI impact either, according to Slok, citing the San Francisco Fed's utilization-adjusted measure of total factor productivity.

Mainstream corporate America is increasingly viewing AI spending as a cost center that weighs on margins, rather than a source of growth. Venture-backed companies, on the other hand, are spending more on AI, pointing to Ramp AI Index data and the work of Ramp chief economist Ara Kharazian. Slok argues that mainstream corporations do not need the latest AI models and are unwilling to pay for them.