Apollo chief economist Torsten Slok says AI has yet to deliver a financial payoff for companies outside tech

In an October 24 Daily Spark note, Apollo chief economist Torsten Slok wrote that AI “has delivered zero financial payoff to corporate America outside of tech.” Apollo’s comparison, based on Bloomberg and Macrobond data, shows the profit margin of the seven big tech companies known as the Magnificent 7 rising to about 30% in the latest data, up from under 15% in 2023. Margins for the other 493 companies in the S&P 500 have stayed flat at around 10% for years.

According to the note, inflation-adjusted revenue per worker is rising only for those seven companies and is flat for the rest. The San Francisco Fed’s productivity series shows no sign of AI boosting productivity growth. Slok says AI spending is concentrated in a small number of firms and that token spending is rising mostly at venture-backed companies. Companies outside tech are starting to treat token spending as a cost that weighs on margins rather than a source of growth.

Slok adds that AI “does not understand accountability, trust, culture, unwritten rules, ethical trade-offs or fairness.” The note concludes that “the AI story will be decided in the S&P 493, not the Mag 7.” Bloomberg reported on Slok’s assessment on October 25. Apollo notes that the views are the author’s own and not investment advice.