AI's Economic Impact Lags Outside Tech Sector

Torsten Slok, chief economist at Apollo Global Management, stated that artificial intelligence has not yet translated into measurable productivity gains or improved financial performance for most companies outside the technology sector. He noted that despite significant investments and widespread enthusiasm around AI, the technology has not generated financial benefits for American companies outside the tech industry.

Revenue Growth Stagnates for Non-Tech Firms

Slok wrote that revenue per employee is increasing for the "Mag 7," a group of seven major technology companies, but remains stagnant for the S&P 493 index, which represents a broader range of American companies. He emphasized that the future of AI will be determined by the performance of the S&P 493, not the Mag 7, and so far, no signs indicate that revenue growth or profit margins are improving outside the technology sector.

Lack of Productivity Gains Reported by Executives

A study conducted in August 2026, involving 6,000 business executives from the USA, the United Kingdom, Germany, and Australia, found that 90 percent of them had not observed productivity gains linked to AI over the past three years. Despite this, some companies have continued to reduce their workforce, citing the adoption of AI as a reason.

AI Projects Reveal Hidden Costs

In the software engineering industry, the migration of the source code of Bun from Zig to Rust, conducted with the help of an AI tool called Claude Fable, appeared to suggest a productivity gain. However, the project also revealed hidden costs, as the generated code contained over 13,000 unsafe blocks, and some files reached nearly 10,000 lines. This led to the emergence of a new job title: AI-generated code cleanup specialist.

Investors Monitor AI Spending Closely

Investors are closely watching AI spending and returns on investment as companies increase their infrastructure spending. Meta Platforms (META) projects aimed at boosting investment spending raised concerns last week, leading to a decline in its stock price and pushing its credit risk indicator to a record level. Concerns about infrastructure investments funded by debt and high valuations have also grown, as seen in the case of Firmus Grid, an Australian data center company that abandoned its initial public offering after investors rejected its proposed valuation of $30 billion.

AI Infrastructure Spending at Risk

Gartner estimated that more than $3.5 trillion in AI infrastructure spending could be at risk of depreciation by 2030 if revenues fail to justify these investments. Elon Musk has warned about the increasing financial pressure on AI infrastructure companies, noting that SpaceX obtained $40 billion in loan financing to purchase graphics processors. He predicted widespread bankruptcies and consolidation among small AI infrastructure companies, particularly affecting "neocloud" companies.

Venture-Backed Firms Spend on AI Chips

Slok noted that venture-backed companies are increasingly spending on AI chips, while traditional companies remain reluctant to pay for the latest models. He emphasized that as long as agentive AI and token spending are limited to a small part of the economy, the macroeconomic effects of AI will remain very limited. AI is also not capable of understanding responsibility, ethical compromises, and trust, elements that influence reputation risk and ultimately determine revenue growth and profit margins.

AI Sector Faces Investor Doubts

In this context, technology values linked to AI fell for the second consecutive day on Friday, October 30, 2026, as investors questioned the future profitability of hundreds of billions of dollars invested in the technology. The S&P 500 declined 2.3 percent, the Nasdaq composite index 3.5 percent, and Intel plummeted 30.7 percent, nearly hitting its worst day since its founding in 1972. The stock price of Nvidia, a chipmaker that has become a symbol of enthusiasm for AI, fell 4.9 percent. This decline would be the primary factor behind the drop in the S&P 500, more so than Intel.

Investors Demand Proof of AI Value

Joe Tigay, a portfolio manager at Equity Armor Investments, explained that the AI sector has entered a phase where it must "prove itself." Investors are now more focused on tangible outcomes and profitability rather than the potential of AI alone, reflecting a shift in market expectations and priorities.