Apollo economist: AI brings ‘zero financial payoff’ to most companies

Despite enormous investment and the pervasive hype around artificial intelligence, the technology has brought corporate America no financial payoff whatsoever outside the tech industry. That is the conclusion reached by Torsten Slok, chief economist at Apollo Global Management, in a recently published note.

Slok looks at what he calls the S&P 493 — the S&P 500 minus seven tech giants: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. Across the remaining companies, he finds, profit margins and revenue per worker appear flat, with no evidence that AI is lifting productivity.

“Despite massive investments and widespread hype around artificial intelligence, the technology has delivered zero financial payoff to corporate America outside of tech,” Slok said.

One might assume the non-tech companies are simply lagging behind the giants and will eventually catch up. Slok is skeptical: he argues it will be hard for corporate America to “turn increasingly cheap intelligence into higher revenue growth and higher profit margins.”

“AI may be a great calculator, but in business, intelligence is mostly judgment,” he writes. According to the economist, AI “does not understand accountability, trust, culture, unwritten rules, ethical trade-offs or fairness, all of which shape reputational risk and ultimately drive revenue growth and profit margins.”

Recent studies point in the same direction: so far, AI has yet to deliver meaningful productivity gains.

Source: TechCrunch