In AI, the 41% Depends on the -59% | The Daily Spark - Apollo Global Management

Macroeconomic Indicators & Trends August 07, 2026 In AI, the 41% Depends on the -59% About the Author Torsten Slok Partner, Chief Economist Share In business, profit margins are frequently higher for the owner of the end-customer relationship. But that is not the case for AI. In AI, profit margins are higher the further you get from the end user, see chart below. This is important because it means the AI boom's profits are currently being funded by investors rather than earned from customers. The upstream margins are real, but they are paid for out of capital raised by the layer losing money, not out of cash generated by end demand. That makes the 41% contingent on the -59% continuing to be financeable. The bottom line is that the most profitable part of the AI value chain depends on the least profitable part continuing to grow revenue or raise capital. Capital can bridge the gap for a while, but not indefinitely. And therein lies the risk: will the ROI show up for AI's end customers fast enough to sustain the spending that is generating those upstream margins? 1 page Note: Data as of 2Q 2026 and for OpenAI (1Q 2026 estimate from PitchBook) and Anthropic (2Q 2026 estimate from Financial Times). Averages are equal-weighted bucket averages of Energy & Grid (Constellation Energy, Vistra, NextEra Energy, Vertiv, Eaton, Arista Networks), Silicon & Equipment (Nvidia, AMD, Broadcom, Marvell, TSMC, SK Hynix, Samsung Electronics, Micron), Compute & Cloud (Super Micro, Dell Technologies, Foxconn, Equinix, Digital Realty, Amazon/AWS, Microsoft/Azure, Alphabet/Google Cloud, CoreWeave, Nebius) and Models & Applications (OpenAI, Anthropic). Sources: Bloomberg, PitchBook, Apollo Chief Economist Download high-res chart Are you a financial professional? Tell us your role for a more relevant Apollo.com experience. I'm a Wealth Professional I'm an Institutional Investor I'm neither of these Thanks for letting us know. Your preference has been saved. Disclosures This presentation may not be distributed, transmitted or otherwise communicated to others in whole or in part without the express consent of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”). Apollo makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness, or completeness of any of the statements made during this presentation, including, but not limited to, statements obtained from third parties. Opinions, estimates and projections constitute the current judgment of the speaker as of the date indicated. They do not necessarily reflect the views and opinions of Apollo and are subject to change at any time without notice. Apollo does not have any responsibility to update this presentation to account for such changes. There can be no assurance that any trends discussed during this presentation will continue. Statements made throughout this presentation are not intended to provide, and should not be relied upon for, accounting, legal or tax advice and do not constitute an investment recommendation or investment advice. Investors should make an independent investigation of the information discussed during this presentation, including consulting their tax, legal, accounting or other advisors about such information. Apollo does not act for you and is not responsible for providing you with the protections afforded to its clients. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security, product or service, including interest in any investment product or fund or account managed or advised by Apollo. Certain statements made throughout this presentation may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such statements. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Sign Up for The Daily Spark Get daily data-driven insights from industry-leading economist Dr. Torsten Slok delivered right to your inbox, every day. Subscribe