States Whose Businesses Are Embracing Artificial Intelligence

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As artificial intelligence technologies have become more prevalent in the last few years, businesses everywhere are trying to understand what AI means for them.

Major tech corporations like Google, Microsoft, and OpenAI (maker of ChatGPT) have gotten headlines for driving the development and adoption of artificial intelligence, but AI has the potential to impact companies of all sizes and sectors, including small and local businesses. From automating routine tasks to improving efficiency and personalizing customer service and marketing, businesses are already identifying a variety of uses and applications for this emergent technology.

However, nationwide data shows that AI is still early in the adoption curve, and businesses in the U.S. still have a long way to go in integrating and maximizing the benefits of artificial intelligence.
 

Trends in AI Adoption in the Workplace

A small but growing share of U.S. businesses are using AI

Source: Tivly analysis of the U.S. Census Bureau's Business Trends and Outlook Survey data

Despite all the buzz, AI adoption in business remains fairly low. According to data from the U.S. Census Bureau, only around 5.5% of businesses report that they are currently using AI in the production of goods and services. However, AI adoption has been steadily increasing and this trend is expected to continue. Just 3.7% of businesses were using AI 12 months ago, but 8.1% of firms report that they plan to use AI in the next six months.

Business Use of AI by Firm Size

Small businesses are more likely to use AI to replace employee tasks

Source: Tivly analysis of the U.S. Census Bureau's Business Trends and Outlook Survey data

So far, larger businesses tend to be most likely to embrace AI technology. Among the largest firms—those with more than 250 employees—8.3% report using AI to produce their goods and services. Interestingly, however, the very smallest businesses also appear open to integrating AI into their work.

Small businesses with one to four employees have the third-highest rate of AI adoption at 6.1%. These smaller companies are also the most likely to use AI to replace employee tasks. A total of 28.5% of AI-adopting firms in this size group report doing so—the highest across all business sizes. For small business owners, AI may be an especially useful resource for completing routine but often time-consuming tasks like data entry or simple communications, allowing them to improve productivity and efficiency despite their low headcounts.

Source: Tivly analysis of the U.S. Census Bureau's Business Trends and Outlook Survey data

In addition to business size, rates of AI adoption also vary by geography and industry. Firms in the South and Midwest tend to have the lowest rates of AI adoption, led by Mississippi at just 1.7% of businesses. Western states have higher rates of adoption than most of the country, with Colorado topping the U.S. at 7.4% of businesses, while select Eastern states like Florida and Delaware also rank highly.

Some of the geographic divide may be driven by industrial factors. Fields like information (20.5%); professional, scientific, and technical (14.9%); and educational services (10.3%) are most likely to use AI, and those industries are also most common in the regions of the country where AI use in business is high. The fields that use AI the least include construction, transportation and warehousing, and accommodation and food services, all of which have less than 2% of firms using AI.

Below is a complete breakdown of AI adoption among U.S. businesses for all 50 states. The analysis was conducted by Tivly, using data from the U.S. Census Bureau’s Business Trends and Outlook Survey. For more information, see the methodology section below.

Full Results

Methodology

To find the states whose businesses are embracing Artificial Intelligence (AI), researchers from Tivly—a commercial insurance marketplace and services provider—used the latest data from the U.S. Census Bureau’s 2024 Business Trends and Outlook Survey. The researchers ranked states by the share of employer businesses that used AI in the production of goods or services in the previous two weeks. Some examples of AI are machine learning, natural language processing, virtual agents, and voice recognition. Researchers also calculated the share of businesses using AI to perform tasks previously done by employees (among businesses that use AI), the share of businesses planning to use AI in the next six months, the share of businesses planning to use AI to perform tasks done by employees (among businesses planning to use AI in the next six months), and the most common type of AI used among businesses. To reduce variability and to supplement the primary data fields, the latest data available from the Business Trends and Outlook Survey’s AI Supplement dataset was used for certain national and state calculations.