‘Zero financial payoff outside tech’: Apollo chief economist on AI productivity growth

Despite a surge in AI spending, private equity firm Apollo Global Management's chief economist Torsten Slock argues that the technology has delivered no financial benefits to companies outside of the tech industry. In a recent note, Slock examined the S&P 500, subtracting the "Magnificent Seven" tech giants—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.

For the remaining 493 companies, profit margins and revenue per worker appear to be stagnant, suggesting AI has not boosted productivity. Slock emphasizes that while AI can be a powerful tool, it lacks the nuanced understanding of human factors that drive business success—such as accountability, trust, culture, ethical considerations, and fairness.

He points out that AI fails to grasp these essential elements that shape reputational risk, revenue growth, and profit margins. Slock's conclusions align with multiple studies indicating that enterprise AI adoption has yet to produce significant productivity gains. Meanwhile, Big Tech is set to invest $650 billion in AI, dwarfing the GDP of many nations.

If AI revenue fails to justify these investments, the potential for impairment of $3.5 trillion in AI infrastructure spending by 2030 is a real concern, according to Gartner. While optimism persists about AI's future impact, doubts remain about when and if the substantial spending will translate into profits. Slock further notes that mainstream corporate America is hesitant to invest in the latest AI models and is unwilling to pay for them.