Private equity giant: AI payoff strictly limited to Big Tech
The Magnificent Seven are galloping off with the profits, while the rest of the S&P 500 see no benefit, claims Apollo
Apollo Global Management, a prominent private equity firm, asserts that artificial intelligence (AI) has not yet yielded financial benefits for US businesses outside of the technology sector, as reported in its Daily Spark blog. The firm's chief economist, Torsten Slok, highlights that while big tech companies like the "Magnificent Seven" are experiencing revenue growth per worker due to AI, this trend is not mirrored across the broader S&P 500.
Despite high spending on AI, Apollo argues that most companies have not seen an increase in revenue or a decrease in costs, leading to concerns about the economics of continued investment. The firm's observations align with findings from other reports, which suggest that AI's impact on corporate productivity and profitability remains limited.
Slok questions whether mainstream corporations will ever reap the rewards of AI, emphasizing that intelligence in business relies heavily on judgment and context, including factors like accountability, trust, culture, and ethical considerations. The firm also notes a decline in token spending growth, indicating that companies are becoming more price-sensitive and may shift to cheaper alternatives, undermining the long-term viability of investing heavily in AI infrastructure.
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