Despite massive investment and widespread hype, artificial intelligence has produced no measurable financial payoff for corporate America outside the tech sector, according to an analysis from Apollo's chief economist. The analysis, which relies on data from Bloomberg and Macrobond, finds that the gains are concentrated in a handful of companies.
Revenue per worker is climbing at the Magnificent Seven, the group of megacap tech companies. For the other 493 companies in the S&P 500, it is flat. Profit margins follow the same split. The charts in the analysis are adjusted for inflation to the fourth quarter of 2019.
The analysis also finds no sign that AI is lifting productivity growth. It measures total factor productivity using a utilization-adjusted series from the Federal Reserve Bank of San Francisco, adjusted for cyclical changes in how heavily factors of production are used.
Venture-backed companies are spending more and more on AI tokens, but the analysis says mainstream corporate America does not need the latest models and is unwilling to pay for them. Spending data in the analysis draws on the Ramp AI Index, and comments from Ara Kharazian, chief economist at Ramp, are included in the source material.
That pullback has consequences for how companies view the technology. Token spending is no longer seen as a growth engine by many mainstream firms. Instead, it is increasingly treated as a cost center that drags on margins. Until agentic AI and token spending spread beyond a small part of the economy, the analysis says, the macroeconomic effects of AI will remain very limited.
The larger question is whether companies can turn increasingly cheap, commoditized models into higher revenue growth and stronger margins. The analysis is skeptical that this will be easy. It argues that AI may be a powerful calculator, but business intelligence is mostly judgment. Judgment depends on context, and the answer can change depending on which person or which model is asked.
The analysis also points to limits that software alone may not overcome. AI does not understand accountability, trust, culture, unwritten rules, ethical trade-offs or fairness, it says. Those factors shape reputational risk, and reputational risk, the analysis argues, ultimately drives revenue growth and profit margins.
The bottom line, according to the analysis, is that the AI story will be decided in the S&P 493, not the Mag 7. So far, it says, there is no evidence that revenue growth or margins are improving outside the tech sector.
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