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AI won’t pay off for the S&P 493 until CEOs rebuild the work
Apollo's Torsten Slok says AI will not pay off for the S&P 493 until CEOs rebuild how work gets done.
Key points
- Slok says AI has delivered no financial payoff outside the technology sector, with margins flat across the other 493 S&P 500 companies.
- Surveys from the St.
- The article argues AI gains stay in pockets because workflows, approvals and reviews were built around people, and the CEO must own the
Why it matters. The article argues that AI spending will keep yielding limited company-wide gains until operating models change, since the value so far has sat with AI infrastructure sellers.
Apollo Global Management chief economist Torsten Slok wrote on Oct. 24 that outside tech, AI has delivered no financial payoff. Margins are flat across the other 493 S&P 500 companies, and surveys from the St. Louis Fed and Census Bureau put work use of generative AI at about 40% of workers. Azure revenue rose 48% and Google Cloud 103% in the quarter ended Sept. 30, but the buyers of that capacity reported job cuts, not margin gains.
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AI won’t pay off for the S&P 493 until CEOs rebuild the work
Stop counting layoffs as AI returns. Apollo Global Management chief economist Torsten Slok wrote on Oct. 24 that outside the technology sector, AI has delivered zero financial payoff . Revenue per worker and profit margins are rising at the Magnificent 7 and flat across the other 493 companies in the S&P 500. Outside tech, he writes, token spending is a cost center weighing on margins. The AI story “will be decided in the S&P 493, not the Mag 7.” Slok has the beneficiaries right. Thus far, the value has sat with the companies selling AI infrastructure, not the enterprises consuming the technology. The Oct. 28 earnings reports made the point: for the quarter ended Sept. 30, Azure revenue grew 48% and Google Cloud 103% , driven in large part by AI demand. The buyers of that capacity reported job cuts, not margin gains. The more interesting discussion is what is happening inside those companies that keeps their spend from converting to realized gains, what has to change, and when it will. The payoff is landing in people, not in companies Surveys this year from the St. Louis Fed and the Census Bureau put work use of generative AI at about 40% of workers and adoption at about a quarter of firms. Individuals are running ahead of their employers. Employees are saving real hours with AI. Some teams, and sometimes whole divisions, are seeing real benefit too. But those gains are not add.