What Changed?
Artificial intelligence promised to reshape productivity and corporate performance. So far, it’s reshaped markets more than it has earnings.
According to the Financial Times, roughly 80% of U.S. stock market gains in 2025 have come from AI-linked giants — the so-called “Magnificent Seven.” Their dominance has helped lift indexes to new highs, even as many companies outside tech struggle to show tangible results from AI adoption.
Corporate America has rushed to integrate AI tools into everything from customer service to data analysis. Surveys from Bain & Company and PwC show adoption is accelerating across industries, but executives say the financial benefits remain limited and uneven. The cost of building infrastructure and training staff has outpaced early productivity gains.
The promise is still there — just not in the bottom line yet.
The Numbers
≈ 35% — Share of the S&P 500’s market value now held by the “Magnificent Seven.” (Source: S&P Dow Jones Indices)
3.3% — U.S. nonfarm business productivity growth in Q2 2025, up from –1.8% in Q1. (Source: Bureau of Labor Statistics)
2.4% — Year-over-year unit labor cost increase in Q2, showing efficiency gains are not yet translating to cheaper production.
≈ 25× — Median price-to-earnings ratio of the S&P 500, compared with over 60× for many AI-linked leaders like Nvidia and Tesla.
> 70% — Share of large companies testing or deploying AI tools, according to PwC’s 2025 Global AI Survey.
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Why It Matters
The AI revolution is real — but its economic impact is still in its infancy. For now, AI is a capital-intensive investment story rather than a profitability one.
The Federal Reserve has noted that productivity improvements from AI “may take years to materialize” as firms reorganize workflows and invest in complementary skills. In other words, AI is changing how companies work long before it changes their earnings statements.
That disconnect matters for investors. Stocks are trading on expectations of exponential efficiency that hasn’t yet shown up in output data. If those gains take longer to arrive, valuations could face pressure even if the technology’s promise remains intact.
Takeaway
AI will transform productivity — but not overnight.
We’re still in the adoption phase, where the cost of implementation outweighs the return. History shows that every technological revolution — from electricity to the internet — followed this same pattern: years of investment before years of payoff.
The question isn’t whether AI will boost profits. It’s how long investors are willing to wait.
— Lauren
Editor, American Ledger