Apollo Economist Warns of Core Economic Flaw in AI Boom
Torsten Slok warns that AI compute costs exceed user benefits as market instability hits CoreWeave and Meta.
Chief Economist at Apollo Torsten Slok warned during the week of October 20, 2026, that the artificial intelligence boom is built on a core economic flaw. Slok argues that the marginal cost of producing compute exceeds the marginal benefit delivered to users, leading to a situation where AI has provided zero financial payoff for U.S. companies outside of the largest hyperscalers.
Slok noted that many AI startups are relying on venture capital to pay compute bills rather than organic earnings. These warnings coincided with a broader market decline in AI-related stocks and rising concerns over circularity in token spending. Market instability manifested in a stock crash of over 30% for CoreWeave and record-high credit default swaps for Meta.
Adding to the volatility, Mark Habib of S&P Global flagged risks associated with interconnected financing structures between hyperscalers and smaller AI firms. Habib suggested these arrangements may hide significant undisclosed debt, complicating the financial picture of AI infrastructure projects.
