AI Profits Concentrated Among 'Magnificent Seven' as Broader Market Lags
AI-generated image · US National Wire
Investment firm Apollo Global Management warns that AI is acting as a cost center for most S&P 500 companies rather than a driver of productivity.
The financial benefits of artificial intelligence are strictly limited to a small group of tech giants, according to Apollo Global Management. In a post on its Daily Spark blog, the investment firm asserts that while the "Magnificent Seven"—which includes Nvidia, Tesla, Apple, and the hyperscalers—are seeing increases in profit margins and revenue per worker, the rest of the S&P 500 are seeing no such benefit, as reported by The Register.
Apollo's chief economist Torsten Slok suggests that mainstream corporations are increasingly viewing token spending as a cost center that weighs on margins rather than a source of growth. Slok argues that AI lacks the judgment, accountability, and understanding of corporate culture necessary to drive revenue growth for most businesses. He further notes that a slowdown in token spending growth indicates high price sensitivity among users.
These findings align with other industry reports cited by The Register. A PwC study found most CEOs have seen neither decreased costs nor increased revenue despite heavy AI investment. Similarly, research from Deloitte indicates that AI tools have not improved the bottom line for most companies. While McKinsey suggests the corporate world is at a turning point toward seeing returns, the firm admits that the number of businesses reporting actual earnings boosts from AI has remained flat.
Some critics on social media have disputed Slok's assessment, while others compare the current trend to the early PC industry, where productivity gains lagged behind adoption by a decade or more.