What if AI Doesn't Work? Apollo's Torsten Slok Sees "No Signs" of AI Productivity Growth.
According to new Apollo research, AI is not delivering on its promises for most of the S&P 500.
AI, once heralded as a revolutionary force, has recently faced skepticism following a bearish analysis by Apollo economist Torsten Slok. Despite massive investments in AI data centers, Slok's findings reveal no evidence of AI driving productivity growth. This has significant implications for the stock market, as the "Magnificent Seven" tech companies have outperformed the rest of the S&P 500.
Slok notes that the majority of AI spending is concentrated among a few AI service providers, with "mainstream corporate America" showing little interest in continued investment. While some S&P 500 firms have seen benefits from AI, Slok warns that not all companies deem the latest AI models essential. To navigate potential market turbulence, investors may consider diversifying into broad-market ETFs like the S&P 500 tracker or bond funds.
An S&P 500 ETF could offer steadier returns during a tech-heavy sell-off, while bonds provide a hedge against stock market volatility. If the U.S. dollar weakens due to a market crash, international stocks might offer a safety net. However, no investment strategy can guarantee protection from market risks, and long-term growth remains a key consideration.
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