Private equity giant: AI payoff strictly limited to Big Tech

AI has yet to deliver any financial payoff to US businesses outside of the tech sector, according to investment biz Apollo Global Management. The global asset firm made the claim in a posting to its Daily Spark blog that features analysis on the US economy and capital markets. It says corporate America is starting to view token spending not as a source of growth, but rather as a cost center that weighs on company margins. Apollo’s chief economist Torsten Slok says that revenue per worker may be rising for the so-called "Magnificent Seven" tech firms, which includes the hyperscalers plus Apple, Nvidia and Tesla, but this isn't the case for the rest of the S&P 500 businesses. The same goes for profit margins, and for AI boosting corporate productivity growth, he adds, posting charts to back up these claims. Apollo's assertion has met with pushback from some, who commented on social media that they did not recognize the picture painted by Slok. Others said a similar effect was noted in the PC industry, when productivity growth lagged the widespread adoption of computers in business by a decade or more. However the investment firm’s observations chime with various reports The Register has analyzed over the past year or two, such as one earlier this year from PwC that found the majority of chief executives had enjoyed neither increased revenue nor decreased costs from AI, despite investing heavily in the technology. Research from professional services firm Deloitte also showed that adopting AI tools has not helped the bottom line for most companies, while a separate report found AI is now facing corporate accountability after several years of investment with little or no return, and projects will have to prove their worth or be axed. McKinsey reckons the corporate world is now at a turning point and on the road to seeing a return for all the effort that organizations have put into pilots and early AI deployments – although it concedes the number of businesses reporting an actual earnings boost from their AI initiatives has remained flat. Slok questions whether mainstream corporations will ever be able to turn AI projects into higher revenue growth and higher profit margins, despite the appearance of cheaper or open-sourced models. In business, intelligence is mostly judgment, he says, and therefore depends on context. He notes that AI does not really understand anything, but especially accountability, trust, culture, unwritten rules, ethical trade-offs or …