Top economist warns AI is giving ‘zero financial payoff’ to many firms - and warns 'mainstream corporate America is pulling back' on AI spending

A top economist has cautioned that artificial intelligence is providing little financial benefit to most major companies, with the technology only delivering significant gains for the world's leading tech firms. Torsten Slok, chief economist at Apollo Global Management, warned that AI investments are proving to be a costly burden for mainstream corporate America, as most non-tech companies have yet to see any substantial advantages from using AI.

According to Slok's note, the technology has not yet translated into higher revenue growth or improved profit margins for non-Mag 7 companies. In contrast, the top seven technology firms, known as the Mag 7, have experienced the most substantial boost from AI, with rising revenue per worker and stable profit margins. Slok argued that despite the hype around AI revolutionizing the workforce, the technology has not yet shown any meaningful impact on the bottom line for the majority of large organizations.

The economist cautioned that as long as AI and token spending remain limited to a small segment of the economy, the macroeconomic effects of AI will be minimal. Slok suggested that the potential for AI to bring costs down and improve revenue growth and profit margins may become more apparent as the technology becomes more sophisticated and cost-effective.

However, he cautioned that even with lower costs, businesses will still face challenges, as AI lacks the ability to understand complex human factors such as judgment, context, and ethical considerations.