AI is a cost center. That’s not a joke.
An economist calls out the AI boom’s hidden financial risks.
The story
A top economist warns that AI's economic promise is overblown, citing flat demand, lack of productivity returns, and unsustainable financing models, as AI-related stocks and credit default swaps fluctuate.
Source: fortune.com
Our reading
Torsten Slok, an economist, is warning that AI isn’t delivering the economic boom everyone thought it would. He says the demand for compute power is flat, and companies aren’t seeing the productivity gains they hoped for. He’s not just saying AI is overhyped—he’s saying it’s a cost center. That’s a big deal, because cost centers are the financial equivalent of a roommate who never pays rent. Slok also points out that most AI spending is being funded by venture capital, not actual profits. So the next time you hear about a startup launching a new AI tool, remember: it’s probably not paying for itself. And if it is, it’s probably not doing it in a way that makes anyone else rich.
