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● LIVE Updated 1h ago · 15 sources tracked

Here's the 'core economic flaw' in the AI bull case as stock and bond trades unravel, according to a top economist

Apollo Chief Economist Torsten Slok warns that artificial intelligence investments face a core economic flaw as stock and bond trades unravel. Slok highlights that the AI payoff has been slow to materialize outside the tech sector, resulting in a growing reluctance among firms to pay for AI services. Revenue and margin gains remain heavily concentrated in the Magnificent Seven, while the cost of producing computing power may outstrip returns. Analysts observe that token spending growth has slowed down, suggesting the demand curve for compute is flat and sensitive to price changes.

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  • ✓ Apollo Chief Economist Torsten Slok warned that the AI boom may be built on an economic weakness where the cost of producing computing power could be greater.
  • ✓ Revenue and margin gains from artificial intelligence remain concentrated in the Magnificent Seven, with zero financial payoff observed outside the tech sector.
  • ✓ The artificial intelligence payoff for firms has been slow to materialize, creating a growing reluctance to pay for AI services.
🛡️ Source Corroboration: 15 independent reporting domains (90% confidence) ⏱ Read time: ~3 min

What changed

Apollo Chief Economist Torsten Slok issued a series of warnings highlighting a flat demand curve for compute and zero financial payoff outside the tech sector.

Live updates

  1. Economist Torsten Slok Warns of Core Economic Flaw in AI Bull Case

    Apollo Chief Economist Torsten Slok warns that artificial intelligence investments face a core economic flaw as stock and bond trades unravel. Slok highlights that the AI payoff has been slow to materialize outside the tech sector, resulting in a growing reluctance among firms to pay for AI services. Revenue and margin gains remain heavily concentrated in the Magnificent Seven, while the cost of producing computing power may outstrip returns. Analysts observe that token spending growth has slowed down, suggesting the demand curve for compute is flat and sensitive to price changes.

    Why it matters

    The artificial intelligence boom has driven massive capital expenditures and triggered a global construction boom for computing centers, with Nvidia emerging as a primary beneficiary. However, financial analysts and wealth management firms like RBC are increasingly scrutinizing the vast gap between capital expenditure and actual cash generation. As Wall Street pulls back from the sector, questions regarding the long-term financial sustainability of the infrastructure wave intensify.

    What is confirmed

    • Apollo Chief Economist Torsten Slok warned that the AI boom may be built on an economic weakness where the cost of producing computing power could be greater.
    • Revenue and margin gains from artificial intelligence remain concentrated in the Magnificent Seven, with zero financial payoff observed outside the tech sector.
    • The artificial intelligence payoff for firms has been slow to materialize, creating a growing reluctance to pay for AI services.

    Still unconfirmed

    • The demand curve for compute is flat and highly sensitive to price changes following a recent slowdown in token spending growth.

    What to watch next

    • Further earnings reports from the Magnificent Seven indicating whether non-tech firms begin adopting paid AI services.
    • Broader market movements in stock and bond trades reflecting confidence in AI capital expenditures.
    Sources used for this update (15)
    1. Seeking Alpha — AI infrastructure: The gap between capex and cash generation (CRWV:NASDAQ)
    2. Apollo Global Management — No Signs of AI Payoff Outside the Tech Sector
    3. Fortune — Here's the 'core economic flaw' in the AI bull case as stock and bond trades unravel, according to a top economist
    4. RBC Wealth Management — The AI gold rush, two years on: Have our beliefs held true?
    5. Demokratis.co.id — Apollo and RBC Find Limited Returns From AI Outside Tech
    6. BigGo Finance — Global AI Computing Center Construction Boom: Behind Trillion-Dollar Investment, the Only Certain Winner Is Nvidia
    7. Crypto Briefing — Economist warns AI sector’s financial sustainability in question
    8. Bloomberg.com — Apollo’s Slok Says AI Has Delivered Zero Payoff Outside of Tech
    9. www.tokenpost.com — Slok Sees Revenue and Margin Gains Concentrated in the Magnificent Seven
    10. finance.yahoo.com — Apollo exec says AI has ‘zero financial payoff’ beyond tech sector
    11. finance.yahoo.com — Here’s the ‘core economic flaw’ in the AI bull case as stock ...
    12. dnyuz.com — Here’s the ‘core economic flaw’ in the AI bull case as stock ...
    confidence 90%
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