Today’s weekly market commentary continues the discussion around our favorite topic, Artificial Intelligence (AI). In the past, we have discussed the tremendous investment which is being made, and will continue to need to be made, in order to support the rapid growth of AI – data centers, software, hardware, training, support, etc. So today’s piece makes the case that rapidly growing enterprise AI spending, especially among smaller firms and across multiple industries, displays there is proper demand to support these investments being made.
The enclosed graph shows the results from a survey conducted by economists at the Federal Reserve Bank of Atlanta. The graph shows the annual AI spending per employee for different sized companies. There are four groups shown – those companies with 0 to 49 employees; those with 50 – 99 employees; those with 100 – 249 employees; and finally, those companies with 250+ employees. The light blue bars for each group represent the annual AI spend per employee in 2025. And then the dark blue bars for each group represent the annual AI spend per employee in 2026.
As can be seen from the data, AI spend has increased across all sizes of business. But interestingly, as the data shows, it is the smaller enterprises which are increasing their AI spending at a more rapid pace. Those companies with 49 employees or less have increased their AI spend by 70%. Amazingly, those companies with 50 – 99 employees have almost doubled their spend with a 96% increase. Companies with 100 – 249 employees have increased by 68%, and then finally larger organizations with 250+ employees have increased their spend by 52%. Though 52% is the smallest increase, it is important to recognize these large organizations still invest the most per employee and support most of the AI spend across all industries.
As the piece explains, “growth is widespread by industry. Year-over-year, construction and real estate spending on AI grew 47%, manufacturing 34%, and retail 39%. Business and professional services lead at 74%, which we attribute to its high concentration of knowledge-based tasks well-suited to AI tools.” – AOM 476
In terms of what this means for investors, “we believe this survey supports the view that AI investment is becoming more pervasive, with meaningful growth potential as model capabilities improve and companies integrate AI more effectively into their workflows. While larger firms still account for the bulk of AI spending, smaller firms may accelerate the overall pace of AI investment as they growth faster and narrow the gap. In our view, this bodes well for AI enablers, such as the providers of logic, memory, networking, and power that form the foundation of AI services.” – AOM 476
We would ask that you review the attached piece at your convenience and please let us know if you have any questions or if you would like to discuss it further. And as we always end this correspondence, please remember that regardless of current momentum and regardless of the key takeaways in this weekly perspective, we will continue to monitor and manage with a thoughtful approach based on your specific long-term objectives. Thank you for your continued confidence and look forward to speaking soon.
