AI adoption spans multiple business operations
As of June, nearly nine out of ten businesses in the Fifth District provided their employees with AI tools for at least one standard task. Roughly 83 percent of these companies actively used AI in some part of their business operations, with the most common applications including summarizing, writing, and analyzing data. The main areas where AI tools are being used are sales and marketing, management, and strategic planning. However, AI is less commonly deployed in areas that require direct engagement with customers, such as customer service, compared to internal functions.
Capital investment trends and AI spending
Across all sectors, businesses in the Fifth District reported a general increase in capital investment over the past year. The largest gains were observed in the construction and professional and management services sectors. Growth rates were 5.5 percent and 4.0 percent respectively. However, the percentage of capital investment directly dedicated to AI remains relatively low. Approximately 30 percent of firms allocated between 1 percent and 9 percent of their total capital to AI. While 40 percent of businesses made no AI-related investments at all. This suggests that while AI is becoming more prominent, it is not yet a major part of most firms' capital budgets.
A firm in the computer services sector from South Carolina shared that its AI investments mainly include license costs. The investments also include the development of internal AI tools. It emphasized that these costs are relatively small when compared to its overall capital expenditures. The firm also noted that while it is making significant efforts to develop AI tools in-house. These efforts aim to reduce long-term expenses. However, these developmental efforts are not always captured under the traditional definition of capital spending. As a result, firms might classify some of their AI investments as operational rather than capital expenses.
Future AI investment expectations
Looking ahead, many firms in the Fifth District expect AI to play a larger role in their capital spending. The professional and management services sector stands out as the leader in this trend. With 24 percent of firms planning to allocate between 10 percent and 24 percent of their capital investment to AI over the next year. About 14 percent of firms in this sector expect to invest between 25 percent and 49 percent. And 7 percent plan for a range between 50 percent and 74 percent. These numbers are supported by other surveys. Surveys include the Business Trends and Outlook Survey and The CFO Survey. Which also indicate that high-skilled service sectors are both currently investing in and anticipating the greatest growth in AI-related investments.
Despite initial efficiency improvements from AI adoption, many businesses are still in the early stages of integrating the technology. Some are in the planning phase, others are developing their own AI tools. And a few have only recently begun allowing employees to experiment with AI tools. A manufacturing company that produces wood and pallets in North Carolina shared that it has not yet managed to implement AI in its production process. But it is actively exploring its use in planning and scheduling activities for production.
The Fifth District's survey highlights that while AI adoption is growing and investment in the technology is on the rise, many businesses are still in the process of understanding how best to incorporate AI into their operations. The majority of companies are still evaluating the technology’s potential and determining the best applications for their businesses.
These findings underscore a gradual and cautious approach to AI integration. Companies are experimenting, learning, and developing their own methods to maximize the benefits of AI while managing costs and risks. As more data becomes available and as tools evolve, it is expected that the pace of AI adoption and investment will increase further in the coming years.
With firms in both the construction and professional services industries showing the highest growth rates in capital investment, it is clear that certain sectors are more receptive to and capable of incorporating AI into their operations. As these trends develop, the overall impact on the economy, employment patterns, and business models could become more significant over time.
In summary, the survey provides a snapshot of the current state of AI adoption and capital investment in the Fifth District. While AI is widely used in many businesses and is expected to grow in importance, it remains a developing and evolving area. As companies continue to explore AI’s potential, the economic and operational outcomes will likely become more defined and impactful in the near future.