No AI Profit Margins Growth Outside Tech, Says Apollo's Slok
AI's regulatory demands are significantly delaying profit realization outside tech, reshaping sector priorities by 2027.
Key Points
- 1Third major economist discussing AI impact outside tech sector in 2026.
- 2Regulatory needs delaying AI productivity in healthcare, finance, and pharma.
- 3Trend highlights growing importance of AI regulation for profits.
What Changed
Torsten Slok, Apollo's Chief Economist, has noted the absence of rising profit margins from AI in sectors outside of technology. Regulated industries such as healthcare, banking, and pharmaceuticals face unique challenges. Unlike sectors that rapidly innovate, these industries must reckon with complex regulatory landscapes. Historically, similar to the Dot-com era of the late 1990s, AI's potential benefits are currently restricted by external factors, delaying expected windfalls.
Strategic Implications
The growing regulatory burdens in non-tech sectors diminish the anticipated financial returns of AI integration, granting traditional tech companies a tactical advantage. Firms in regulated arenas must navigate compliance complexities, leading to delayed competitive benefits. This shift reallocates power towards tech companies with established AI infrastructures, while placing interim pressure on non-tech players to innovate within legal confines.
What Happens Next
Given the evidence of delayed sectoral benefits, stakeholders can expect strategic adaptations by industries—particularly through lobbying for regulatory reform by 2027. Additionally, we may see an increase in partnerships between tech firms and non-tech companies, targeting streamlined AI integration. Policy responses are likely to include gradual easing of regulatory frameworks, with pilot initiatives potentially proposed within two years to encourage innovation.
Second-Order Effects
The impact on the supply chain is notable, with tech companies potentially consolidating roles across verticals such as healthcare IT. Adjacent markets, including regulatory technology solutions, are positioned to gain traction as industries seek efficient compliance mechanisms. This spillover further emphasizes how the regulation of AI affects wider economic dynamics, perpetuating the dependency on tech firms for initial AI integration solutions.
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