Here's the 'core economic flaw' in the AI bull case as stock and bond trades unravel
Apollo Chief Economist Torsten Slok argues that the AI boom faces a 'core economic flaw' because the cost of compute currently exceeds the productivity benefits for most firms. He warns that many AI startups are relying on venture capital funding rather than organic revenue to sustain their operations.
Why it matters
This critique challenges the sustainability of the current AI investment bubble and suggests a potential market correction if productivity gains do not materialize.
Apollo Chief Economic Torsten Slok was on a warpath this past week, issuing a series of warnings about the AI boom as Wall Street retreated from the sector.
On Tuesday, he pointed to the recent slowdown in token spending growth , saying the demand curve for compute is flat and highly sensitive to price changes.
Meanwhile, most companies that are investing in the technology have yet to see significant productivity returns, Slok added, with AI now looking more like a cost center than a growth driver.
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