Live Markets: AI boom yet to pay off beyond big tech

Microsoft

Mon 17:06

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AI BOOM YET TO PAY OFF BEYOND BIG TECH
Despite huge investment and endless hype, artificial intelligence has yet to deliver a financial payoff for most of corporate America, said Torsten Slok, chief economist at Apollo Global Management.
Revenue per worker and profit margins are climbing at the "Magnificent 7" tech giants. But for the other 493 companies in the S&P 500 .SPX, both are flat and there is no sign yet that AI is lifting productivity growth.
As a result, mainstream companies are pulling back. Many now see spending on AI tokens as a cost center that squeezes margins rather than a driver of growth. And as long as agentic AI stays confined to a small slice of the economy, the macro impact will be limited.
The next question is whether companies can turn increasingly cheap, commoditized intelligence into faster revenue growth and fatter margins. That may be harder than it sounds. Business intelligence is mostly judgment, and judgment depends on context. AI also doesn't grasp accountability, trust, culture, unwritten rules or fairness -- all of which shape reputational risk and, ultimately, the bottom line, Slok said.
The takeaway is that the AI story will be decided in the S&P 493, not the Mag 7, and so far there's no evidence it's paying off there.
(Karen Brettell)
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