A Tale of Two Markets
In a widely circulated research note, Apollo's Chief Economist Torsten Slok presents a startling conclusion: AI has delivered 'zero financial payoff' for most of corporate America. The analysis splits the S&P 500 index into two groups: the seven largest
technology companies, dubbed the 'Magnificent Seven,' and everyone else, which Slok labels the 'S&P 493'. The data shows a widening gap between these two cohorts. While the tech giants are seeing significant growth, the vast majority of large public companies are not yet seeing a similar boost from AI.
The Stark Numbers
The data paints a clear picture of this divergence. For the Magnificent Seven—which includes firms like Nvidia, Microsoft, and Alphabet—revenue per employee has surged from around $550,000 in 2022 to nearly $800,000. For the other 493 companies, that same metric has remained essentially flat since 2019. The story is similar for profit margins. The tech leaders have seen their margins climb toward 30%, while the rest of the pack has been hovering around a much lower 10% since 2023. According to the Apollo assessment, there is no broad evidence that AI is improving revenue growth or margins outside of the tech sector itself.
No Widespread Productivity Boom… Yet
One of the biggest promises of generative AI is a massive leap in economy-wide productivity. However, the Apollo report finds no clear signs that this is happening yet. Key metrics for productivity, such as output per hour, are growing at historically unremarkable rates. This suggests that while individual employees or specific teams might be getting more efficient, it has not translated into a measurable financial impact on the bottom line for most companies. Other studies have echoed this, finding that while many firms report efficiency gains, only a small fraction have seen it lift overall revenue.
AI Spending Becomes a Cost Center
For many companies in the S&P 493, the initial excitement around AI is giving way to a more cautious approach. Slok notes that 'mainstream corporate America is pulling back' and starting to view heavy AI spending not as a guaranteed source of growth, but as a cost center that eats into their already stagnant margins. This is creating a split where a small number of mostly venture-backed firms account for the vast majority of spending on cutting-edge AI models, while most established businesses are more reluctant to pay for tools whose return on investment remains unproven.
Why Judgment Still Trumps Calculation
The report argues that the real test for AI's long_term value will be decided by the S&P 493, not the Magnificent Seven. Slok suggests that turning cheap intelligence into higher profits is harder than it sounds. He posits that while AI is a 'great calculator,' real business success relies on judgment. Critical business drivers like accountability, trust, company culture, and navigating ethical trade_offs are things AI doesn't understand, yet they are fundamental to shaping reputational risk and, ultimately, driving sustainable growth.
