Private equity giant: AI payoff strictly limited to Big Tech
Apollo Global Management says AI has so far delivered little financial benefit to US businesses outside the leading technology companies. Its chief economist argues that rising AI costs are weighing on company margins, raising doubts about whether widespread adoption will translate into stronger growth and profits.
Apollo’s analysis says revenue per worker, profit margins and productivity have improved for the “Magnificent Seven” tech firms, but not for the rest of the S&P 500. The claim has drawn disagreement, and some compare the delayed payoff to computers, whose productivity gains took years to appear. Reports from PwC and Deloitte also find limited returns for most businesses, while McKinsey says few companies report an earnings boost. Apollo further points to slowing growth in token spending and questions whether investment in ever-larger data centres can earn adequate returns.
In short
- Apollo says AI has yet to boost most US companies’ finances.
- Gains appear concentrated among the “Magnificent Seven”.
- Slowing token demand raises questions about data centre returns.
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The case for
Apollo’s analysis suggests AI’s costs are arriving before broad financial returns: outside the biggest technology firms, productivity, revenue per worker and margins have yet to show clear gains. If adoption requires costly software and data-centre investment without reliably improving earnings, businesses may struggle to justify continued spending, and investors should be cautious about assuming AI will lift economy-wide growth.
The case against
The absence of broad gains so far does not show that AI will fail to pay off: new technologies can take years to change workplace practices and appear in productivity data, as happened with computers. Early costs may also reflect investment and experimentation, while benefits emerge later or in ways not captured by the measures Apollo highlights; a gradual spread of useful applications could ultimately improve output and profits across many industries.
Explained simply
Apollo Global Management is a large US investment firm that manages money for investors and also publishes economic analysis. The S&P 500 is a share-market index tracking 500 major US companies; the “Magnificent Seven” is a nickname for seven of its largest technology firms.
Businesses are spending on AI tools and the computing infrastructure behind them, including data centres. The question is whether those costs are leading to higher productivity, revenue or profits, and whether any gains are concentrated in a small number of technology companies.
The issue matters because companies’ investment and operating costs can affect their profits, while productivity growth can influence the wider economy. Some analysts argue that benefits may take time to emerge, as happened with earlier technologies, and reports differ on how much AI is helping businesses so far.
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