Apollo's Chief Economist Says AI Has Paid Corporate America Nothing Outside Tech, and Firms Are Pulling Back

The AI trade rests on one big assumption: that the rest of the economy will eventually pay for all this compute. One of Wall Street's most-read economists says there is no sign of that yet.

In a note published on October 24, Apollo chief economist Torsten Slok wrote that "despite massive investments and widespread hype around artificial intelligence, the technology has delivered zero financial payoff to corporate America outside of tech."

Two economies

Slok splits the market in two. Revenue per worker is rising for the Magnificent 7 and flat for the other 493 companies in the S&P 500. Profit margins show the same pattern: up for the Mag 7, flat for the S&P 493. And there are still no signs of AI lifting productivity growth.

The more pointed claim is about behavior. "With no impact on the bottom line, 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.

Venture-backed companies keep spending more and more on tokens. Mainstream companies, in Slok's view, do not need the latest model and are unwilling to pay for it. As long as agentic AI and token spending stay confined to a small part of the economy, the macro effects of AI will be very limited.

That cuts against the steady drumbeat of executives crediting AI with savings, like Barclays planning to cut 5,000 jobs with AI. Announced cuts are one thing; Slok is looking for the payoff in revenue and margins, and not finding it.

Judgment is the hard part

Slok also offers a reason. AI may be a great calculator, he argues, but in business most intelligence is judgment, and judgment depends on context. AI does not understand accountability, trust, culture, unwritten rules, ethical trade-offs or fairness, and those shape reputational risk and, in the end, revenue and margins.

His bottom line: "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."

A market already nervous

The note landed in a week when investors were already punishing AI spenders. The Nasdaq fell about 0.7 percent on the week, including a 2.6 percent drop on Thursday, its worst day since June. Lam Research, Meta, IBM and Tesla all beat earnings and all fell the next morning, as attention turned to the return on AI spending and the cost of funding it.

Money rotated elsewhere. The Russell 2000 index of small caps gained 2 percent for the week.

The note is short and compares group averages, so it does not by itself prove that AI caused the gap. The S&P 493 also includes chip, memory and power suppliers that profit from selling to the Mag 7. Still, Slok's point stands as a test the AI trade has yet to pass: the companies doing the buying are the ones that need to see a return.

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