Apollo Global Management's Chief Economist Torsten Sløk has issued a warning that the economic benefits from artificial intelligence remain highly concentrated within a handful of large technology companies, with the broader corporate landscape in the United States yet to see significant gains from the technology.

In a daily note published on Sunday, Sløk pointed out that this "growth gap" is becoming increasingly pronounced. Data indicates that the so-called "Magnificent Seven" – comprising Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla – are experiencing robust productivity gains and significant per capita income growth. In contrast, within the broader S&P 493 index, which represents the remaining 493 constituents of the S&P 500 after excluding these seven stocks, corporate profit margins remain stagnant, and revenue growth for smaller companies is notably weak.

This perspective from Apollo sheds light on a shift in market dynamics. Since January 2021, the top ten stocks in the S&P 500 have contributed 54% of the market's total returns. Currently, the concentration of these leading AI stocks is at a historically high level, with their earnings growth exceptionally strong, while the majority of other listed companies continue to struggle with pressures stemming from the high-interest-rate environment.

Sløk concluded that the high-interest-rate environment, a result of the Federal Reserve's sustained rate hikes, continues to impact companies with weaker credit fundamentals. There is no current evidence to suggest that AI is significantly boosting the revenue or profit margins of companies outside the "Magnificent Seven."

Despite recent data showing that the annual revenue run-rate from AI-related businesses at giants like Microsoft and Meta has grown substantially, Apollo believes the diffusion of these gains has been slower than anticipated. This implies that for investors betting on the AI theme, a simple index-based strategy may no longer be sufficient to diversify risk, as the performance divergence among individual stocks is intensifying.