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The AI boom is happening at seven companies, the rest of the S&P 500 isn't seeing it

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The AI boom is happening at seven companies, the rest of the S&P 500 isn't seeing it

Def. Not A Bubble: Torsten Slok, chief economist at Apollo Global Management, recently shared a scathing note on the true extent of the so-called "AI revolution." The data suggest AI's macroeconomic impact remains very limited, which could mean we are heading toward some truly interesting times in terms of financial trends and global economic outcomes.

According to Slok's Daily Spark note, AI has so far delivered zero financial payoff to corporate America outside of tech, despite the massive amount of money and hype surrounding the latest advancements in large language model research.

A few tech-related corporations are seeing noticeable returns, but the overwhelming majority of companies in the S&P 500 are seeing little to show for their generative AI or LLM efforts.

Slok said inflation-adjusted revenue per worker is rising only for the Magnificent 7, the Big Tech-heavy slice of the S&P 500 that includes Nvidia, Tesla, Amazon, Microsoft, Google/Alphabet, Apple, and Meta. Profit margins are rising for that group too. Meanwhile, the "S&P 493," as he calls the rest of the index, is flat on both revenue per worker and profit margins.

Furthermore, Apollo's economist does not see any sign that AI is boosting productivity growth. To put it simply, GenAI and LLMs are having no impact on the bottom line outside of tech. With nothing to show for it, mainstream S&P 500 companies are already pulling back on the massive sums AI requires, treating token spending as a cost that weighs on margins rather than a potential source of future growth.


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