Apollo Data Shows Zero AI Margin Gains Outside Tech Through 2024
Apollo economist Torsten Slok documents the absence of AI-driven margin expansion outside technology. The gap between current valuations and observed cash-flow effects points to slower diffusion than equity markets currently price. Sectors with heavy regulation and long capital cycles are the primary constraint.
Slok's market note tracks operating margins across eleven non-tech sectors and finds no measurable lift from AI deployment. The data cover quarterly reports through Q3 2024 and isolate software and semiconductor firms as the sole beneficiaries. Implementation outside these areas requires extended data-cleaning, regulatory compliance, and process redesign that have not yet registered in earnings releases.
Valuations of leading AI suppliers embed assumptions of rapid diffusion to the broader economy. Current multiples price terminal margins 300-400 basis points above recent non-tech averages. Historical productivity episodes, including the 1990s IT wave, required five to seven years before economy-wide margin effects appeared in national accounts.
Regulated industries such as healthcare, utilities, and defense face statutory hurdles that slow adoption. Capital budgeting cycles in these sectors run three to five years, creating a timing mismatch with equity-market expectations. Token-cost compression further signals that revenue capture may remain concentrated among a narrow set of infrastructure providers.
Absent margin expansion by mid-2026, forward earnings estimates for AI-exposed names face downward revision. Reduced corporate AI budgets would follow quickly once ROI thresholds are missed in successive earnings cycles.
Slok: Non-tech S&P 500 operating margins show no cumulative increase above 2023 levels by December 2026
Sources (3)
- [1]Apollo Global Management Market Note(https://www.apolloglobal.com/insights)
- [2]Bureau of Labor Statistics Productivity and Costs(https://www.bls.gov/productivity/)
- [3]Federal Reserve Bank of St. Louis FRED Series(https://fred.stlouisfed.org/)