AI Not Paying Off Outside Tech Sector

Yeah, maybe not

The chief economist at a major "asset management" company says that AI is not paying off anywhere outside the tech sector. Nobody is benefiting from the damned botslop except the companies behind it.

Torsten Slok is Partner and Chief Economist for Apollo Global Management, an American asset management outfit that handles about $850 billion. In a post earlier this month, Slok makes a point of separating the Magnificent 7 tech companies (NVIDIA, Apple, Microsoft, Alphabet, Amazon, Tesla, and Meta) and the S&P 493 (what you get when you remove the big tech companies from the S&P 500). 

Slok's statement is pretty blunt: 

Despite massive investments and widespread hype around artificial intelligence, the technology has delivered zero financial payoff to corporate America outside of tech.

 No revenue per worker increases, no profit margin increases, and no productivity boosts for the S&P 493-- only the for the Mag 7 (that is apparently what we're calling them in the investment world). 

Can American corporations turn cheap "intelligence" into revenue growth and increased profits? Slok has his doubts:

AI may be a great calculator, but in business, intelligence is mostly judgment. Judgment depends on context, and the answer varies with which human or which model you ask. Perhaps most importantly, AI does not understand accountability, trust, culture, unwritten rules, ethical trade-offs or fairness, all of which shape reputational risk and ultimately drive revenue growth and profit margins.

Emphasis his.

What a very human way to look at AI's utility (or lack thereof). The article comes with a series of charts that make his point with simple graphic clarity. 

Two points for the education world to consider. AI is failing to transform any sector outside of its own, which suggests that its ability to transform education is being grossly overstated. It also suggests that the inevitability argument-- that students must learn to work with AI or be left behind in the AI-centered future-- is being grossly overstated. For the zillionth time, education leaders would be wise to work a little harder at distinguishing between legitimate attempts to predict the future from disingenuous attempts to market a particular future into existence.