Apollo Economist Warns of AI Financial Sustainability

Rising debt costs for tech giants and cooling investment signal potential instability in the AI sector.

Updated on Oct. 24, 2026 in Artificial Intelligence

Isometric editorial illustration of a heavy stack of silicon wafers balanced on a rusted scale, representing tech industry financial instability. — Apollo chief economist Torsten Slok warns that the AI industry faces significant sustainability hurdles as massive compute costs continue to outpace user-driven revenue. AI Illustration. Upload story photo >

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Apollo chief economist Torsten Slok is warning that the AI industry faces significant sustainability hurdles as compute costs outpace user benefits. The caution follows record highs in credit default swaps for major players like Meta and a sharp decline in CoreWeave stock.

Why it matters

The warnings highlight a growing disconnect between massive capital expenditures and actual productivity returns. Most companies remain reluctant to pay for advanced models, leaving the industry reliant on venture capital funding rather than organic earnings.

Hyperscalers are planning to spend $800 billion in capital expenditure this year, with projections reaching $1 trillion in 2027. Meta alone has slated between $135 billion and $145 billion for spending this year.

The players

Torsten Slok

He is the chief economist at Apollo Global Management who specializes in analyzing global economic trends and capital markets.

The details

Data shows that 80% of top AI spenders rely on venture capital, often using those funds to cover compute costs from firms that act as their own financial guarantors. This reliance on external capital persists despite a lack of significant revenue improvements for firms outside the S&P 500 Magnificent Seven.

October 2026 saw CoreWeave stock decline by more than 30 percent.
October 22, 2026, marked the date Torsten Slok identified a slowdown in token spending growth.
October 24, 2026, was when Meta credit default swaps reached record levels.

The Tech Race

The aggressive capital expenditure by hyperscalers mirrors the speculative investment cycles seen during the dot-com bubble. This trend marks a potential departure from historical productivity-driven tech growth as the industry seeks to justify its massive infrastructure costs.

Investors may see increased volatility in tech-heavy portfolios as credit default swap prices signal broader market concern. Business users should monitor potential pricing changes if companies shift focus from aggressive expansion toward sustainable, revenue-focused models.

The takeaway

Companies should prioritize building AI tools that provide verifiable productivity gains to move beyond venture capital reliance. Developing clear ethical frameworks and accountability standards remains essential for long-term commercial adoption.