Economic Impact of AI Concentrated Among the 'Magnificent Seven'
Companies are beginning to cut spending on AI adoption, viewing it as a cost that reduces profit margins.
In a study, Torsten Slok, Chief Economist at Apollo Global Management, asserts that growth in revenue per employee, adjusted for inflation, and profitability is noticeable only among the 'Magnificent Seven'—Nvidia, Tesla, Amazon, Microsoft, Google (Alphabet), Apple, and Meta✴. For the remaining 493 companies in the S&P 500, these metrics, according to his assessment, have not changed.
Slok found no signs of a significant impact of AI on productivity. He notes that traditional companies do not need the latest models and are unwilling to pay much for them, whereas startups continue to increase spending with the support of venture capital investors. If AI adoption remains concentrated in a small segment of the economy, its macroeconomic effect will be limited.
According to Slok, models may eventually become a mass-standardized product and decrease in price, but achieving growth in revenue and profitability will be more challenging than it appears. Analysts at Gartner have also suggested that by 2030, investments in AI infrastructure totaling over $3.5 trillion could depreciate, although other economists expect returns on investment through productivity growth.
