Every earnings call these days seems to mention AI, so here's an awkward question: is it actually making ordinary companies any money? Torsten Slok, the chief economist at the investment giant Apollo Global Management, looked at the numbers and says the answer, so far, is no.
Slok didn't look at the usual suspects. He set aside Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, the seven tech giants that dominate the market, and focused on what he calls the "S&P 493," the rest of the index. For that big group of regular companies, profit margins look flat. Revenue per worker looks flat too. He says he can't find any sign that AI is boosting their productivity. His blunt verdict is that AI has delivered zero financial payoff to corporate America outside tech.
He's also doubtful that will change soon. His argument is that cheap intelligence isn't really what most businesses are short on. As he put it, AI may be a great calculator, but in business, intelligence is mostly judgment. Running a company means dealing with accountability, trust, culture, unwritten rules and fairness, and those are the things that drive reputation, sales and margins. Slok argues AI doesn't understand any of that.
He isn't alone. Several recent studies have also found that AI hasn't produced the big productivity gains people were promised, at least not yet.
The timing is interesting. This week Microsoft, Alphabet and Amazon report earnings, and investors are already asking whether hundreds of billions in AI spending will ever earn its keep. If the companies buying AI aren't seeing results, that question gets harder to dodge.
Of course, many technologies took years to show up in the numbers, and that could be what's happening here. So which is it: is AI overhyped for regular businesses, or are we just too early to judge?
Is AI actually making your company more productive, or is it mostly hype so far