by David Lindfield
Artificial intelligence (AI) has delivered “zero financial payoff” for businesses outside the technology sector, a leading economist warned, challenging the promises behind corporate America’s expensive rush into automation.
Apollo Global Management chief economist Torsten Slok said companies beyond the largest technology giants are showing no meaningful improvement in key financial measures despite the enormous investment pouring into AI.
His assessment comes as businesses pursue automation to reduce labor costs and boost profits, and investors face growing questions about whether the spending boom can sustain itself.
Promised Gains Fail To Show Up
In a weekend note, Slok contrasted the performance of the “Magnificent Seven” technology giants with the remaining companies in the S&P 500.
“Revenue per worker is rising for the Mag 7 but is flat for the S&P 493,” Slok wrote.
“Profit margins are rising for the Mag 7 but are flat for the S&P 493,” he added, saying that “there are still no signs of AI boosting productivity growth.”
The findings challenge expectations that adopting AI would rapidly produce stronger results across the economy.
Gains among the technology companies powering the boom have not been matched by comparable improvements across the broader market, according to Slok.
“The bottom line is that the AI story will be decided in the S&P 493, not the Mag 7, and so far, there is no evidence that revenue growth or margins are improving outside the tech sector,” he concluded.
AI Spending Becomes A Cost Burden
The expense of using advanced models is creating another problem for businesses trying to turn AI adoption into higher profits.
Slok said corporate customers are increasingly questioning the costs rather than treating every dollar spent on AI as an investment in growth.
“Mainstream corporate America is pulling back and starting to view token spending not as a source of growth but as a cost center that weighs on margins,” he wrote.
Goldman Sachs CEO David Solomon offered a similar distinction between useful business tools and the most advanced AI systems.
Despite the bank recently announcing a $500 million AI initiative, Solomon told investors last week that “there’s very little that we do where we need frontier models,” Fortune reported.