Apollo economist finds no broad corporate AI payoff

Apollo Global Management chief economist Torsten Slok asserts that artificial intelligence has yet to yield significant financial gains across most major US companies, defying expectations that heavy AI investment would swiftly enhance business performance. Examining the seven largest tech-oriented stocks against the remaining 493 companies in the S&P 500, Slok discovered that revenue per worker and profit margins have increased among the seven "Magnificent Seven" but remained stagnant across the rest.

He dubbed the latter the S&P 493. Despite substantial AI investments, the technology has delivered no financial benefit to corporate America outside the tech sector, according to Slok's analysis published on October 24. This suggests that AI's economic advantages are primarily confined to its biggest suppliers and technology platforms, rather than being broadly reflected in the financial results of businesses adopting the tools.

However, a flat aggregate margin does not confirm that every non-Magnificent Seven company has failed to reap AI rewards or that particular activities are absent of gains. Slok also noted the lack of substantial acceleration in productivity growth attributable to AI. The comparison utilized inflation-adjusted revenue per employee, corporate profit margins, and productivity indicators, excluding a company-by-company assessment of individual AI projects.

The economist contended that businesses scrutinizing the costs of software subscriptions, computing capacity, and specialized systems versus promised efficiency improvements are experiencing caution. He pointed out that venture-backed companies continue to increase their AI token consumption, whereas others often lack the need for advanced models and are reluctant to pay premium prices.

Slok warned that macroeconomic effects of AI may remain limited if AI-driven software agents and intensive model usage stay concentrated within a limited economic segment. The broader financial test, he stated, would be whether cheaper AI intelligence ultimately leads to stronger sales and profitability across regular businesses.

This challenge goes beyond technical capabilities, as commercial decisions require judgment shaped by organizational context, trust, accountability, corporate culture, and reputational considerations - qualities that cannot be automatically replaced by cheaper automated reasoning. Slok's October assessment builds upon an August Apollo analysis showing that profit margins outside the seven tech leaders did not improve despite significant AI spending.

The latest findings come as investors examine the disparity between companies heavily investing in AI infrastructure development and those expected to generate economic returns from its use. Financial markets have rewarded several leading technology groups for their exposure to AI expansion, even as questions persist about the widespread spread of benefits.

The analysis presents a snapshot of reported financial outcomes, not a definitive verdict on the usefulness of individual AI applications. Benefits may take time to appear in corporate financial accounts after implementation and staff training.