Massive AI investments have so far produced little measurable benefit
The billion-dollar investments in AI infrastructure have not yet paid off for large parts of the economy. Particularly outside the technology industry, no economic benefit has yet been identified that would justify the high expenditure.
Only big tech companies benefit
This was stated by Torsten Slok, chief economist at the investment company Apollo Global Management, according to a report by the news agency Bloomberg. So far, there has been no significant boost from AI in terms of productivity or important company metrics, he explained. In an analysis published on Saturday, Slok refers to the development of sales per employee. This figure is increasing for the seven large technology companies, the so-called “Magnificent Seven”. However, the remaining 493 companies in the US stock index S&P 500 are stagnating. A similar picture emerges when it comes to profit margins. There are also no signs of a noticeable positive effect from the use of AI when it comes to productivity growth.
According to Slok, many companies’ attitudes towards spending on AI are changing. Instead of viewing technology as a growth engine, parts of the economy are increasingly critical of the costs. In particular, the expenses for tokens that arise when using large language models could become a burden on profit margins. The doubts come at a time when investors are closely following the business figures for the current quarter. They pay particular attention to whether the high investments in AI infrastructure and software actually translate into additional revenue. The Facebook Group Meta recently announced that it would further expand its AI ambitions and provide even more capital for this. The announcement unsettled investors and put pressure on the stock.
Economy under pressure
The financing of the infrastructure boom is also a concern. The high spending on data centers and other AI components is partly supported by debt capital. At the same time, planned IPOs of data center companies face resistance when investors consider the valuations to be excessive. Market research firm Gartner estimates that more than $3.5 trillion in AI infrastructure investments could be at risk by 2030 if the revenue generated does not justify the costs. Data center operators would therefore have to earn a total of around 8.5 trillion dollars (around 7.3 trillion euros) by the end of the decade in order to cover their investments and achieve a return on investment of twelve percent.
Slok therefore considers the overall economic impact of AI to be limited for the time being. As long as young companies financed by venture capital spend large sums on AI models and their use, while traditional companies remain cautious, the effect is likely to be manageable. In addition, AI has not yet been able to adequately take into account factors such as a sense of responsibility, ethical considerations and trust. However, these are crucial for a company’s reputation and therefore also for sales and profits.
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