No Signs of AI Payoff Outside the Tech Sector
This article argues that artificial intelligence has yet to provide a measurable financial return for companies outside of the major tech sector. It suggests that mainstream corporations are increasingly viewing AI spending as a cost center rather than a growth driver due to a lack of productivity gains.
Why it matters
It challenges the prevailing market narrative regarding the immediate economic impact of AI, suggesting a potential bubble or overestimation of corporate utility.
Despite massive investments and widespread hype around artificial intelligence, the technology has delivered zero financial payoff to corporate America outside of tech. Revenue per worker is rising for the Mag 7 but is flat for the S&P 493, see the first chart below. Profit margins are rising for the Mag 7 but are flat for the S&P 493, see the second chart below. And there are still no signs of AI boosting productivity growth, see the third chart below. With no impact on the bottom line, mainstream corporate America is pulling back and starting to view token spending not as a source of growth but as a cost center that weighs on margins.
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