The significant capital expenditure required to compete in the artificial intelligence sector has created a wider performance disparity between large and small technology stocks. Smaller companies are struggling to keep pace with the investments made by tech giants in AI infrastructure and talent. This disparity is causing concern among investors, who are closely watching how companies are managing their AI strategies and investments.
AI's impact isn't limited to tech stocks, as it has the potential to drive growth and productivity across various sectors. However, the immediate benefits are primarily seen in the build-out of AI infrastructure, favouring companies providing essential tools and services. Smaller AI start-ups are finding it difficult to compete with Big Tech, who are rapidly integrating AI capabilities and consolidating the market. This has led to concerns about reduced competition, stalled progress and inhibited innovation.
Despite the challenges, AI offers opportunities for small businesses to streamline operations, enhance marketing and improve customer engagement. AI technologies are becoming more accessible, enabling smaller enterprises to compete with larger counterparts. However, regulatory burdens and compliance costs related to data privacy and AI could disproportionately affect smaller businesses, potentially deterring investment and preventing new companies from emerging.
