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AI delivers ‘zero financial payoff’ to most companies, Apollo economist says
AI1 min read
An economist at Apollo Global Management says AI has not yet raised profits or productivity at most big U.S. companies outside the tech industry. He says the technology has so far brought "zero financial payoff" to these firms.
What happened
Torsten Slok, chief economist at the investment firm Apollo Global Management, published a note on AI and company profits. He looked at the S&P 493, which is the S&P 500 list of big U.S. companies without seven large tech firms. He found that profit margins and revenue per worker look flat. He saw no sign that AI is making workers more productive.
Key numbers and facts
- The S&P 493 is the S&P 500 without Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
- Profit margins (the share of each sales dollar that becomes profit) look flat for these companies.
- Revenue per worker also looks flat.
- Slok says AI has delivered "zero financial payoff" to companies outside tech.
Why the tech giants are different
A common guess is that non-tech companies are just slower to adopt AI than the big tech firms. Slok doubts that this is the whole story. He says AI can do fast math, but business success also depends on trust, company culture, unwritten rules and fairness. Those things are hard for a computer to understand.
Why it matters
Companies have spent huge amounts of money on AI. If the money does not turn into higher sales or profit, investors and bosses may question whether the spending is worth it. Other recent studies have also found that AI has not yet led to big gains in productivity, which means how much work gets done for each worker.
What to watch
- Whether profit margins and revenue per worker rise at non-tech companies in future reports.
- Whether new studies find clear productivity gains from AI.
- How companies change the way they use AI to earn more money.
Glossary
- S&P 500
- A list of about 500 large U.S. public companies that is used to track how the stock market is doing.
- Apollo Global Management
- A large investment firm that buys and manages companies and funds, often through private equity.