Ah, well. I’m sure what it doesn’t add in economic value it will add in intellectual, artistic, and psychological value… right?

Apollo analyst Torsten Slok said that while the Magnificent Seven has seen real profits from AI, the profit margins and revenue per worker of other companies remains flat, with no evidence that the technology is enhancing productivity.

At the tech firms, revenue per employee has jumped from an average of $550,000 in 2022 to almost $800,000 this year, Apollo’s analysis shows.

Has revenue per employee really gone up in a meaningful way? Or has most of the Mag 7 performed a series of layoffs that has boosted the average based on the remaining employees.

They also claim that profit margins are way up at the Mag 7 and that’s true on paper, but I think there’s a bunch of financial shenanigans that are muddying that picture, from stuffing debt into SPVs to changing depreciation schedules. Not to mention that they’re reporting changes in investments into other AI companies like OpenAI and Anthropic that are paper gains until they go public.

I would argue the only company actually making money on the AI boom is nVidia, and while everyone trots out the line about selling shovels during the gold rush, they don’t really account for the fact that nVidia’s stock value is based on their ability to sell greater and greater amounts of shovels in the future. Once the boom ends their inflated value will plummet. I suspect nVidia will have the same trajectory as Cisco after the dot com bubble burst - the company was still around and selling lots of network equipment, but their stock price only recently (in the past year) hit the same level that it did at its 2000 peak.

Sure it costs a fortune and doesn’t improve productivity. But at least we’re 1 step closer to the plot of The Terminator.

This is the same Apollo whose CEO Marc Rowan is one of the executive board members on Trump’s “Board of Peace.”