Artificial Intelligence Is Accelerating—But Is Adoption Keeping Pace?

Big breakthroughs in artificial intelligence (AI) seem to be happening weekly, and new tools are making their way into the business world at a pace that feels unprecedented. But despite the velocity of innovation, enterprise-wide adoption is not as advanced. For investors, this creates opportunity, uncertainty, and a critical need to separate hype from substance.

Let’s start with the big picture: companies are pouring capital into AI infrastructure at a faster rate than expected. According to recent industry data, leading cloud providers (often referred to as “hyperscalers”) have sharply increased their spending on AI-related hardware and services, far surpassing prior forecasts. The market is moving quickly because the capabilities of generative AI models, like those used in customer service automation, software development, and content creation, are evolving rapidly.¹

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In fact, some companies are now using AI to build better AI. This self-reinforcing loop of model training and deployment is pushing technological boundaries, as newer iterations are fine-tuned with speed and accuracy once thought to be years away. From a capital markets perspective, that has translated into a flurry of investment in semiconductor manufacturing, data center capacity, and model training platforms.

But here’s the catch: while the technology is advancing, actual business adoption remains relatively early-stage. For investors, we think this means treading with caution if you think you’ve landed on the ‘next big thing.’ Remember, it’s early days.

The gap between innovation and real-world implementation is a common feature of emerging technologies. It was true during the early days of cloud computing and mobile, and it’s likely to hold true for AI as well. The reasons are varied—organizational inertia, lack of internal AI expertise, cybersecurity concerns, regulatory uncertainty, and the simple challenge of quantifying return on investment.

For investors, this dynamic creates an environment where AI-related companies may see their valuations rise based on anticipated future earnings rather than current revenue. That’s not inherently a problem, but it does require selectivity and discipline. Not every company riding the AI wave will emerge as a long-term winner. Some will stumble due to scalability issues, while others may struggle to turn innovation into profit.

Another question facing investors is the broader economic impact of AI. There’s no doubt that he technology has the potential to transform productivity by automating repetitive tasks, surfacing insights faster, and streamlining operations across industries. But we’re still in the early innings of understanding how that will show up in economic data, labor market shifts, and corporate earnings.

Will AI lift corporate margins meaningfully in the next two years? Or will the biggest gains accrue more slowly over time? We simply don’t have clear answers yet. That said, history suggests that transformative technologies often go through a multi-year diffusion cycle, where early enthusiasm is followed by a period of disillusionment—before eventually finding real, sustainable footing.

One promising development is that companies are beginning to form more deliberate AI strategies, rather than chasing headlines or rolling out chatbots for the sake of saying they’ve “done AI.” In fact, a growing number of CIOs and CFOs are asking tougher questions about ROI, data security, and operational integration. That’s a good sign. Real adoption often starts with careful scrutiny.

For long-term investors, that’s where the opportunity lies. Not in chasing the hottest AI stocks or betting on the next flashy demo, but in identifying companies with clear plans to integrate AI in ways that improve margins, reduce costs, or unlock new revenue streams. These may not always be the firms dominating today’s news cycle, but they’re likely to be the ones adding lasting value over time.

Bottom Line for Investors

AI is progressing fast, and capital is flowing into the space at an impressive rate. But widespread enterprise adoption is still catching up, and that mismatch deserves investor attention. Over time, we believe the companies that succeed will be those that focus on embedding AI in ways that create measurable business value. We may not see these types of results for some time.

It’s also important for investors to remember that the winners in this space may not be limited to pure-play AI developers. Companies across sectors—from manufacturing to logistics to healthcare—stand to benefit from AI if they can harness it effectively. In that sense, AI may be more like electricity or the internet: not an end in itself, but a foundational tool that reshapes how businesses operate across the board.

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¹ Goldman Sachs. June 9, 2025.

² Zacks Investment Management may amend or rescind the A Better Way Forward: Actively Managing Passive Index Funds guide offer for any reason and at Zacks Investment Management’s discretion.

³ Zacks Investment Management may amend or rescind the A Better Way Forward: Actively Managing Passive Index Funds guide offer for any reason and at Zacks Investment Management’s discretion.

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