{"id":137829,"date":"2026-08-12T20:50:40","date_gmt":"2026-08-12T20:50:40","guid":{"rendered":"https:\/\/www.europesays.com\/ai\/137829\/"},"modified":"2026-08-12T20:50:40","modified_gmt":"2026-08-12T20:50:40","slug":"apollo-economist-drops-stark-take-on-ai-boom","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ai\/137829\/","title":{"rendered":"Apollo Economist Drops Stark Take On AI Boom"},"content":{"rendered":"\n

This article first appeared on GuruFocus<\/a>. <\/p>\n

Apollo Chief Economist Torsten Slok is warning that the AI boom <\/a>could become a market-wide problem if returns on massive hyperscaler spending arrive later than investors expect. Alphabet (NASDAQ:GOOGL<\/a>), Meta (NASDAQ:META<\/a>), Microsoft (NASDAQ:MSFT<\/a>) and Amazon (NASDAQ:AMZN<\/a>) are collectively expected to generate nearly $470 billion in free cash flow by 2030, according to Apollo data, but Slok argues that weaker monetization could leave earnings, margins and ultimately stock valuations exposed. <\/p>\n

“The bottom line is that AI has been the one thing holding up both the economy and markets,” Slok said. <\/p>\n

His concern centers on the widening gap between AI spending and realized returns. Apollo noted that companies outside the major technology sector are spending heavily on AI without yet seeing a meaningful improvement in profit margins. Slok argues that the longer those returns take to materialize, the greater the risk that today’s infrastructure boom becomes vulnerable to a pullback. <\/p>\n

The scale of spending is already enormous. Apollo estimates hyperscaler capital expenditure could reach roughly 3% of U.S. GDP annually from 2027 through 2029, more than double the peak of the late-1990s telecom buildout as a share of the economy. <\/p>\n

Microsoft offers a clear example of the tradeoff. The company spent $41 billion on capital expenditures in its latest quarter while generating $19.6 billion in free cash flow. Microsoft Cloud gross margin slipped to 65%, partly because of continued AI infrastructure investment and higher usage. <\/p>\n

Investor Takeaway <\/p>\n

Investors should watch whether AI revenue growth begins catching up with infrastructure spending. <\/p>\n

Cloud growth, free cash flow, depreciation expense and gross margins will be critical. Microsoft’s Azure revenue rose 43% in its latest quarter, showing demand remains strong, but management still expects fiscal 2027 capital expenditures to rise year over year. <\/p>\n

The bullish case strengthens if hyperscalers can monetize new capacity while maintaining margins and cash generation. If capex keeps climbing while returns lag, however, Slok’s warning becomes more serious: weaker cash flow could pressure megacap valuations and spill into semiconductors, data centers and other AI-linked stocks. <\/p>\n","protected":false},"excerpt":{"rendered":"This article first appeared on GuruFocus. Apollo Chief Economist Torsten Slok is warning that the AI boom could…\n","protected":false},"author":2,"featured_media":73321,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[38222,420,7829,19404,9572,320,7828,40559,33153],"class_list":["post-137829","post","type-post","status-publish","format-standard","has-post-thumbnail","category-microsoft","tag-apollo","tag-azure","tag-azure-ai","tag-capital-expenditure","tag-free-cash-flow","tag-microsoft","tag-microsoft-ai","tag-profit-margins","tag-torsten-slok"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/137829","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=137829"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/137829\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/73321"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=137829"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=137829"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=137829"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}