AI won’t pay off for the S&P 493 until CEOs rebuild the work
Source: Fortune ·
Stop counting layoffs as AI returns.
From the source
Apollo Global Management chief economist Torsten Slok wrote on Oct. 24 that outside the technology sector, AI has delivered zero financial payoff. Revenue per worker and profit margins are rising at the Magnificent 7 and flat across the other 493 companies in the S&P 500. Outside tech, he writes, token spending is a cost center weighing on margins. The AI story “will be decided in the S&P 493, not the Mag 7.” Slok has the beneficiaries right. Thus far, the value has sat with the companies selling AI infrastructure, not the enterprises consuming the technology. The Oct. 28 earnings reports made the point: for the quarter ended Sept. 30, Azure revenue grew 48% and Google Cloud 103%, driven in large part by AI demand. The buyers of that capacity reported job cuts, not margin gains. The more interesting discussion is what is happening inside those companies that keeps their spend from converting to realized gains, what has to change, and when it will. The payoff is landing in people, not…