Apollo Chief Economist Torsten Slok: Weak Margins of S&P 493 Pose Risk to Big Tech Valuations

Thorsten Slok, chief economist at Apollo Global Management, warned that companies outside the handful of largest tech giants are not showing profit growth from artificial intelligence investments — creating risks for Big Tech valuations. This is reported by Bloomberg Tech citing Slok's remarks on the Open Interest channel.

What's the gist of the warning

Thorsten Slok leads economic analysis at Apollo Global Management — one of the world's largest alternative asset managers. According to him, the so-called "S&P 493" is not yet demonstrating tangible returns from AI spending. In other words, massive investments in artificial intelligence across the American economy are not translating into measurable margin growth outside a narrow circle of market leaders.

What is the S&P 493

The "S&P 493" is a common term on Wall Street to describe the S&P 500 index excluding the so-called "Magnificent Seven": Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla. These seven companies have driven most of the capital gains in the index in recent years largely due to the AI boom, while earnings momentum for the other 493 companies has been much more modest.

• The term "S&P 493" describes the S&P 500 without the "Magnificent Seven"
• The warning came from Thorsten Slok, chief economist at Apollo Global Management
• It concerns the gap between AI spending and profit growth at companies outside Big Tech

Why this is a risk for Big Tech

If Slok's thesis is correct, a narrow circle of companies continues to increase capital spending on data centers and chips, betting on future demand from the rest of the economy. But if AI does not convert to profit at most companies, investor enthusiasm may fade, and high valuations for Big Tech stocks could come under pressure.

What this means

Slok's warning is part of a broader discussion about whether an AI expectations bubble has formed on the market: technology giants are spending record sums on infrastructure, but there is limited evidence that these investments are paying off at the scale of the entire economy.