Small Business in the Age of AI

AI is rapidly reshaping how businesses operate, offering new opportunities for productivity, growth, and competitiveness. For small businesses, which have historically lagged behind larger firms in adopting new technologies, the recent expansion of accessible AI tools raises important questions: Who is adopting AI? How are they using it? Are AI's benefits reaching a broad range of firms? JPMorganChase Institute's Small Business in the Age of AI research series offers new evidence on these questions, examining how adoption is evolving across firms and business owners and what these patterns mean for future competitiveness.

Small business AI adoption is accelerating, while adoption remains uneven across firms and industries.

• Newer firms are adopting AI much faster. Businesses founded in 2025 reached a 10% adoption rate in just six months, while those founded in 2019 took more than six years to reach the same level.
• Small businesses have consistently paid for AI and are using a broader range of services, signaling a shift from experimentation to more sustained, operational use.
• Newer adopters start at lower spending levels—driven by the availability of entry-level generative AI subscriptions—while more established adopters maintain or increase spending.
• Employer firms adopted AI at nearly twice the rate of nonemployer firms, with knowledge-intensive industries such as information, professional services, and educational services leading adoption.

AI adoption also differs across business owner demographics, with gaps by both gender and generation.

• Male-owned small businesses consistently adopted AI at a higher rate than female-owned businesses, with the gap widening since 2023.
• Millennial-owned businesses experienced the highest AI adoption rates, followed by Generation Z owners. Generation X and Baby Boomer owners showed slower adoption rates, widening the existing gap in AI use between younger and older business owners.
• The gender gap is most pronounced among Generation Z owners. By 2025, 20% of male-owned Generation Z firms had adopted AI, compared with 13.9% of female-owned firms.

Together, these reports show that small businesses are rapidly adopting AI, using it more consistently, and diversifying use cases, supported by lower costs and easier access. At the same time, persistent gaps across firm characteristics and owner demographics indicate that adoption is not uniform. For policymakers, these findings suggest that improving access to AI tools alone may not be sufficient to ensure broad-based benefits. Addressing barriers related to skills and capacity—particularly for smaller firms and underrepresented business owners—may be essential to supporting inclusive adoption and ensuring that AI contributes to broader small business growth and competitiveness.

Media contact:

Shelby Wagenseller, Shelby.wagenseller@jpmchase.com