Apollo flags a $1.2 trillion hole in tech forecasts

Apollo flags a $1.2 trillion hole in tech forecasts

Apollo Global Management chief economist Torsten Slok has flagged a striking inconsistency in Wall Street’s cash-flow projections for the technology sector versus the rest of the S&P 500 (SP500).

Equity research remains organized by industry silos. When those separate forecasts are added together, they do not add up, he noted. Technology analysts project the sector’s operating cash flow will more than double by 2028, reaching about $2.4 trillion. That implies an increase of more than $1.2 trillion.

The analysts covering every other industry in the index—the companies that would actually purchase AI tools and cloud services—anticipate far smaller cash-flow gains at their own firms. One group is pricing in an explosion of demand for technology products. The other group sees only modest improvement among the customers expected to fund that demand.

Slok added that both pictures cannot be correct. Either the non-technology companies will generate substantially more cash than their own analysts currently expect, or technology’s cash-flow estimates are overly optimistic. That leaves an open question hanging over the AI investment boom: Who will write the checks that make those aggressive technology forecasts come true?

The mismatch highlights how fragmented coverage can produce internally inconsistent market narratives at a time when technology valuations depend on widespread corporate adoption.DisclaimerContent provided by Seeking Alpha is intended for information purposes only, and that Seeking Alpha does not offer any personalist investment advice and is not a licensed securities dealer, broker, US investment adviser or investment bank.