Economist says AI economics don’t add up, with investor cash—not customers—propping up profits

Apollo Global Management’s chief economist, Torsten Slok, warned that the AI boom’s profits are being driven by investor funding rather than end-customer demand, creating a fragile value chain. Drawing on PitchBook and Bloomberg data for firms including OpenAI, Anthropic, Microsoft, Amazon, Nvidia, AMD, Micron, and Constellation Energy, Slok said chipmakers and equipment suppliers are posting the fattest operating margins—about 41%—while model-and-application companies are deeply unprofitable, with margins near minus 59%. He argued the upstream gains depend on continued capital raising by money-losing layers, not cash flows from users. With Goldman Sachs projecting AI investment to top $1 trillion in 2026 but few broad productivity gains outside the market’s largest tech names, Slok cautioned that a slowdown in financing could expose the imbalance and trigger a painful repricing if ROI for end customers fails to materialize quickly.

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