Apollo economist finds no AI payoff in profits outside the tech sector

Torsten Slok, chief economist at Apollo Global Management, published a note on October 24 saying that artificial intelligence has not yet shown up in the profits of large American companies outside the tech industry. "Despite massive investments and widespread hype around artificial intelligence, the technology has delivered zero financial payoff to corporate America outside of tech," he wrote, as reported by TechCrunch.

The claim matters because of how much is being spent. According to Fortune, the large cloud providers plan roughly $800 billion in capital spending this year, and next year's total is expected to top $1 trillion. That bet assumes that companies buying AI will eventually earn more from it. Slok's note says that, so far, the buyers' financial results do not show it.

What the note measures

Slok looks at what he calls the S&P 493: the S&P 500 without Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. For those seven firms, revenue per worker and profit margins are rising. For the other 493, both look flat, according to the note, "No Signs of AI Payoff Outside the Tech Sector".

The note includes five charts. Their titles summarise the argument: revenue per worker moving up for tech but not for the rest of the economy; no signs of profit margins going up outside the tech sector; no signs of AI boosting productivity growth; AI spending extremely concentrated in a small number of firms; and circularity in AI showing up in token spending too. The productivity measure is utilisation-adjusted total factor productivity from the Federal Reserve Bank of San Francisco. Other sources listed include Bloomberg, Macrobond, the Bureau of Labor Statistics and the Ramp AI Index, which tracks business spending on AI.

Slok also argues that companies are starting to treat spending on AI tokens as a cost, not a source of growth. Fortune reports that he said 80% of the top 1% of AI spenders are backed by venture capital. That points to a market where much of the demand comes from firms funded by investors, not from established companies paying out of their own earnings.

The note follows an earlier one from August 9, "The Buyers of AI Are Still Waiting for the Payoff". There Slok broke margins down by sector. Health care margins have roughly halved since 2015. Consumer staples margins are near 6% and consumer discretionary near 8%. Energy and materials have given back most of their 2022 and 2023 gains. Real estate is moving sideways. His summary then: "The AI capex boom is so far only showing up in the sellers' margins, not the buyers'."

Slok's argument about judgment

Slok does not present the gap as a simple delay that time will close. He writes that it will be hard for corporate America to "turn increasingly cheap intelligence into higher revenue growth and higher profit margins."

His reasoning is about what kind of work drives business results. "AI may be a great calculator, but in business, intelligence is mostly judgment," he wrote. He adds that "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." His conclusion: "the AI story will be decided in the S&P 493, not the Mag 7."

Limits of the evidence

The note is one economist's reading of aggregate data. It shows that margins and revenue per worker have not moved for the S&P 493. It does not show why. Flat aggregate numbers can hide gains in some firms and losses in others. They can also reflect costs of adopting AI that come before any return. The published page does not include the underlying figures behind the charts.

The judgment argument is also an interpretation, not a measurement. It is a plausible explanation for the flat numbers, but the charts do not test it. TechCrunch notes that recent studies have also found AI has yet to deliver significant productivity gains, which is consistent with Slok's data but does not settle the cause.

What the data does establish is a split. The companies selling AI and the infrastructure under it are recording higher margins. The much larger group of companies buying it is not, at least not yet in a form that shows up in the S&P 500's accounts.

What it means for work

If Slok is right, AI inside ordinary companies is mostly taking over tasks that can be specified and checked: drafting, summarising, calculating, sorting. Those savings appear too small or too widely spread to move margins at the scale of a large firm. The work that decides revenue, such as choosing what to sell, handling a difficult customer or weighing a reputational risk, remains with people, and Slok argues it will stay there. For employees, this suggests the near-term change is in how routine tasks are done, not wholesale replacement of roles. For companies, it means AI spending is being judged as a cost line, and budgets may tighten if returns stay invisible. What remains open is whether the flat numbers reflect a lag in adoption or a real ceiling on what current AI can contribute to business results.