Key Points:
- Roughly 20% of October layoff announcements were attributed to artificial intelligence (AI) alone. Overall, cost-cutting drove 33% of all layoff announcements.
- Interestingly, businesses are not reporting weaker economic conditions or slower sales as major reasons to announce layoffs.
- Small and medium businesses have a lot more upside to AI adoption rates in the years to come.
- Within sectors, healthcare and retail trade have surprisingly low adoption rates. Information and technical services are at the top.
Recently, there have been many discussions taking place about the possibility of AI driven valuations getting ahead of themselves, but for today I’d like to focus instead on the reasons behind the upward trajectory and specifically whether the AI infrastructure spending is likely to continue for a longer period.
To go back a step, it's important to remember that the main impetus for all companies investing so heavily into their AI infrastructure is not necessarily to monetize AI as a new product offering, but rather as a way to lower costs and offer AI features that keep them competitive with industry peers. On the one hand it could be argued that companies are simply looking to increase profit margins, but for many companies it could literally be a matter of survival.
For this reason alone, it stands to reason that this shift is going to be more prolonged given there are still many industries and sectors that have not yet fully invested into their own AI infrastructure and therefore are likely to be playing catch-up for a while longer (which means that deferred spending is yet to be realized which could keep this trend intact for the foreseeable future).
That being said, short term valuations may still fluctuate wildly in light of these cost saving projections will change day by day, but we believe the underpinnings for the valuations remains relatively durable purely as an investment premise (whether valuations are high or low on a given day is another topic entirely).
It is worth taking a moment here to recognize the human toll that AI adoption will have on workers who will be displaced as a result (and in particular those recent college graduates who are trying just to get a foot in the door). The comments here only reflect the financial implications of these trends on companies, ignoring completely the effects on humanity and the labor markets which are certainly worthy of further commentary.
Cutting Labor Costs by Increasing AI Adoption
As global labor arbitrage becomes less viable and access to cheap labor in emerging markets continues to narrow, businesses are increasingly turning to AI as a domestic solution for cost control and productivity gains. The recent spike in layoff announcements illustrates the pressure on businesses to curb costs, and it seems like businesses plan to increase AI adoption rates as they decrease headcount.
AI tools now offer companies the ability to automate routine tasks, streamline operations, and reduce reliance on large payrolls — without offshoring. From customer service bots to intelligent document processing and predictive analytics, AI is becoming the new workforce multiplier. In this environment, the competitive edge no longer comes from finding cheaper labor abroad, but from deploying smarter algorithms at home.
Tracking AI Adoption with Real Spend Data
The Ramp AI Index offers a new lens into how American businesses are adopting artificial intelligence, using actual spending data rather than just survey responses. Drawing from over 40,000 companies and billions in corporate transactions processed through Ramp’s card and bill pay platform, the index provides a real-time, data-driven view of AI adoption across industries.
Unlike surveys that rely on self-reported usage, the Ramp AI Index identifies AI adoption through verified transactions. When a business pays for an AI product or service — detected via merchant names and line-item details on receipts and bills — it’s counted as an adopter. This method captures actual engagement with AI tools, offering a more accurate and timelier picture of how firms are integrating these technologies into their operations.
Limitations and the Rise of Free AI Tools
While the Ramp AI Index provides a robust measure of paid AI adoption, it likely underestimates total usage. Many businesses experiment with free AI tools or allow employees to use personal accounts for work-related tasks, which don’t show up in transaction data. Still, the index represents a major step forward in understanding how AI is reshaping the business landscape — offering policymakers, investors, and analysts a clearer view of where and how AI is gaining traction.
Adoption Rates Recently Declined for Small and Medium-Size Firms
Source: LPL Research, Ramp Economics Lab 11/12/25
Disclosures: All indexes are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results.
In recent months, small and medium-sized firms have slowed the pace of AI adoption, but probably not for long. In the months before the government shutdown, the corporate sector was developing the economic outlook. It’s possible the temporary concerns about growth and inflation put a damper on adoption rates, but as the tailwinds to growth reemerge, we should expect renewed interest in protecting margins, preparing for expansion, and managing headcount through greater AI adoption.
Hotels and Restaurants Could Benefit from Higher Adoption Rates
Source: LPL Research, Ramp Economics Lab 11/12/25
Disclosures: All indexes are unmanaged and cannot be invested into directly.
It’s not surprising that the information and technical services sectors have high adoption rates, but the drop in adoption rates across sectors suggests some upside usage for several sectors.
Conclusion
There’s a growing number of AI products and services available, and as the ecosystem matures, these tools are becoming better aligned with the needs of businesses — delivering real, measurable value. Not only are the offerings improving in quality, but they’re also earning stronger customer loyalty, reflected in higher retention rates. At the same time, AI spending is increasingly being viewed as a core business expense. The question “What’s your AI strategy?” is no longer just a buzzword, it’s a serious expectation from investors, executives, and advisors who now see long-term investment in AI as essential to scaling operations and staying competitive.
As always, please reach out if you’d like to schedule a time to discuss how these ideas might influence your own strategy.
Sincerely,
Bryan Foronjy, CFP®
Principal Wealth Manager
Foronjy Financial
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