Photo Credit: Vitaly Gariev
Recent studies indicate that AI hasn’t brought any major productivity gains, profit margin increases, or growth potential for any major company outside the tech industry.
New research outlined by investment leader Apollo Global Management finds that despite the astronomical investments and continuous hype surrounding artificial intelligence, the technology has yet to benefit the bottom line of any major corporation in America outside the tech industry.
According to Apollo partner and Chief Economist Torsten Slok, profit margins and revenue per worker appear to remain flat across “the S&P 493″—that is, the S&P 500, minus Amazon, Apple, Google, Meta, Microsoft, Nvidia, and Tesla—with no evidence suggesting that AI has improved productivity.
“Mainstream corporate America is pulling back and starting to view (AI use) not as a source of growth but as a cost center that weighs on margins,” Slok wrote. “The technology has delivered zero financial payoff to corporate America outside of tech.”
“AI may be a great calculator, but in business, intelligence is mostly judgment,” he explained. “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.”
Slok measured three primary metrics that have exploded across the tech sector, but not for regular companies, across a series of graphs: revenue per worker, profit margins, and productivity growth. Since 2022, revenue per employee figures have boomed for tech companies, skyrocketing from $550,000 to nearly $800,000. But that figure hasn’t moved the needle for basically everyone else in the S&P 500.
Profit margins for tech companies have continued to increase since 2022, while other companies in the S&P 500 have experienced stagnation of around 10%. Finally, AI has yet to dramatically increase productivity growth across the entire economy the way that AI supporters have predicted.
Ultimately, while AI leaders have promised an “age of abundance” in which the use of AI will increase productivity to a point that “people won’t have to work” as much, nothing has remotely suggested that such a scenario is true today or even in the foreseeable future. If anything, we’ve seen more people lose their jobs so companies could spend that money on AI infrastructure.
“The question looking ahead is whether, even as models become commoditized, mainstream corporate America can turn increasingly cheap intelligence into higher revenue growth and higher profit margins,” Slok concluded. “That may be harder than it sounds.”
Leave a Reply