Access Opportunities in Rising Corporate AI Adoption
News Summary
New research from Ernst & Young's (EY) latest AI Pulse Survey indicates that corporate investment in Artificial Intelligence (AI) is unlikely to abate soon. The survey found that a substantial 95% of senior business leaders are currently investing in AI, reporting significant positive impacts on operational efficiencies, employee productivity, and customer satisfaction. Notably, 30% of companies anticipate spending over $10 million on AI next year, nearly doubling the 16% at that level this year, signaling a robust increase in investment. Dan Diasio, EY Global Artificial Intelligence Consulting Leader, stated that generative AI has permanently altered the business landscape, observing a divergence between companies making small experiments and those committing larger investments, with the latter gaining a significant lead and positive returns. Given the anticipated continued rise in corporate AI spending, the article suggests investors consider AI-focused ETFs, such as the Alger AI Enablers & Adopters ETF (ALAI). This fund employs a bottom-up research approach to identify long-term growth opportunities by focusing on companies uniquely positioned to benefit from AI development and adoption, seeking those with strong competitive advantages and compelling business economics.
Background
In 2025, Artificial Intelligence (AI) has become a pivotal area for corporate strategic investment. A recent Ernst & Young (EY) AI Pulse Survey revealed that nearly all (95%) senior business leaders across the U.S. are currently investing in AI and observing significant positive impacts on operational efficiencies, employee productivity, and customer satisfaction. The survey underscores the transformative disruption generative AI has brought to the business world. Furthermore, the report indicates that 30% of companies anticipate spending over $10 million on AI next year, nearly doubling the 16% spending at that level this year. Dan Diasio, EY Global Artificial Intelligence Consulting Leader, highlighted a divergence in AI investment: some companies are experimenting modestly, while others are making larger commitments, with the latter increasingly pulling ahead and realizing positive returns.
In-Depth AI Insights
Is the current surge in corporate AI investment sustainable, or merely a symptom of another speculative bubble? - While the EY survey indicates strong investment, historical patterns suggest tech booms often involve speculative excesses. True sustainability will hinge on AI consistently delivering quantifiable ROI, beyond merely conceptual benefits. - Investors must be wary of 'AI-washing,' where companies promote AI investments for capital attraction with limited actual application or benefit. Given the Trump administration's likely focus on tangible economic output over pure technological innovation, this could push companies to prioritize short-term commercialization of AI. - As AI technology matures and companies increasingly seek concrete returns, market consolidation is probable, leading to the obsolescence or acquisition of firms that fail to effectively translate AI into productivity or competitive advantage. How will the 'divergence in AI investment' noted in the EY report reshape industry landscapes and competitive dynamics? - This divergence signals an intensifying 'winner-take-all' effect in the AI space. Leading companies making substantial AI investments will further entrench their market leadership through data accumulation, model optimization, and application iteration, creating formidable moats. - Conversely, companies that underinvest or only engage in small-scale experiments risk marginalization, particularly in terms of efficiency, cost, and customer experience. This could create a class of 'AI losers' within traditional industries, facing sustained pressure on valuations and profitability. - This trend will also impact supply chains: leading AI adopters will demand more robust and specialized AI enablers (e.g., chip manufacturers, cloud service providers), driving growth for these upstream entities and potentially fostering vertical integration or strategic alliances. What are the long-term implications of widespread corporate AI adoption for the labor market and macroeconomy? How might the Trump administration respond? - While the article emphasizes AI's productivity gains, widespread adoption will inevitably lead to structural changes in the labor force. Repetitive, low-skill jobs may be automated, while demand for AI development, deployment, and maintenance skills will soar, widening the skills gap. - This could result in short-term unemployment fluctuations or labor market polarization. The Trump administration may face pressure to balance technological advancement with job preservation. Policies might lean towards incentivizing corporate reskilling programs or directing AI investments through tax breaks towards areas that create high-value new jobs, rather than purely cost-cutting measures. - Macroeconomically, if AI delivers pervasive productivity improvements across industries, it could become a new engine for economic growth, countering potential structural inflationary pressures. However, if AI's benefits accrue to a few dominant firms, it could exacerbate wealth inequality, becoming a social concern for the Trump administration, potentially leading to more aggressive antitrust or worker welfare policies.