If your business doesn’t involve writing lots of code, it’s unlikely you’re seeing much benefit from AI yet.
What happened: Analysis by the investment firm Apollo found that productivity, profit margins, and revenue per worker were flat for 493 of the 500 businesses in the S&P 500 since the AI rollout began. The only seven exceptions were the Magnificent Seven tech companies: Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla.
“With no impact on the bottom line, mainstream corporate America is pulling back and starting to view token spending not as a source of growth but as a cost center that weighs on margins,” Apollo chief economist Torsten Slok wrote.
Data recently released by Ramp, a financial technology company, supports that story: the top 1% of AI spenders are spending just over US$9,500 per employee per month on AI, while the median company is spending less than US$16 per employee per month.
Why it matters: The AI boom has been predicated on the promise that the technology will prove transformative for businesses of all types, not just the giants of the tech sector. So far, there isn’t much evidence of that happening.
Our take: To justify the unprecedented investments made in AI, the industry needs to find a way to make more money — and a lot of it. Estimates of exactly how much vary, but usually land in the trillions of dollars of new revenue by the end of the decade. Achieving that is going to require a lot more spending by a much broader segment of the economy than just seven tech companies.
