For much of the recent conversation around artificial intelligence (AI), the focus has been on possibility: what AI could mean for companies in the years ahead. But for the middle market, the conversation has shifted. The data now tells a clearer story: AI adoption is no longer hypothetical, and it is no longer confined to pilots or experimentation. It is differentiating companies in meaningful ways.

The Year-End 2025 Middle Market Indicator Survey shows that middle market firms investing in, and implementing, AI look fundamentally different from those that are not, across performance, strategy, and resilience. And critically, those differences extend well beyond technology alone.

Note: The data presented is based on the 2025 year-end middle market indicator, looking at a comparative analysis between those who indicated that they use AI (n=854) versus those who do not (n=151).

AI adopters are outperforming

One of the clearest signals in the data is that middle market companies using AI are simply performing better. Firms that report using AI are significantly more likely to say their revenues increased over the past year: 87% of AI adopters experienced revenue growth, compared to just 66% of non-AI firms. The growth gap is not marginal: AI-using firms report an average year-over-year growth rate of 12.9%, on par with the national average at 11.7 and more than double the 5.8% growth reported by firms not using AI.

That stronger performance shows up in how companies are investing in people. Six in ten AI-using firms increased their workforce in the past year, compared to just 39% of non-AI firms. Looking ahead, AI adopters expect their workforce to grow by 10% in the next 12 months, closely matching the national average at 9.2, versus 5% expected workforce growth of firms not using AI. This challenges the common narrative that AI adoption in the middle market is primarily about labor substitution. Instead, AI appears to be enabling growth that requires more—not fewer—people.

AI adopters are also more active strategically. Over the past year, they were more likely to launch new products or services (55% vs. 41%), expand into new domestic markets (42% vs. 26%), expand internationally (21% vs. 6%), and brought in new equity investment (23% vs. 9%).

AI reflects a broader strategic mindset, not a point solution

It’s important to understand the divide between AI users and non-users is not just about whether companies have deployed a specific technology. It reflects a broader difference in how firms think about competitiveness and value creation.

When asked about their most important strategic objectives for the next one to three years, AI-using firms are far more likely to prioritize digital transformation, including AI, automation, cybersecurity, and data capabilities, than firms not using AI. Thirty-eight percent of AI adopters rank digital transformation among their top five strategic priorities, compared to just 20% of non-AI firms.

That mindset carries through to planned investment. Over the next 12 months, AI-using middle market companies are significantly more likely to report high or very high focus on:

  • Technology implementation and upgrades (74% vs. 44%)
  • Data analytics and business intelligence (69% vs. 32%)
  • Cybersecurity measures (68% vs. 40%)
  • Employee training and skill development, including tech and AI skills (70% vs. 53%)

These firms are not treating AI as a standalone tool. Instead, they are building supporting capabilities—data infrastructure, cybersecurity, workforce skills—that allow AI to scale and deliver value over time.

AI adopters are more resilient and more decisive with capital

The AI divide is also evident in how middle market firms think about risk and resilience. Companies using AI are more likely to report having formal risk management programs and to say they feel well prepared for disruptions such as cyber incidents, supply-chain disruption, and regulatory change.

That confidence translates into action. AI-using firms are more likely to be planning expansions, including adding facilities, entering new markets, or pursuing M&A in the coming year. They are also far more active in capital markets. Eighty-seven percent of AI adopters anticipate needing some form of financing in the next one to three years, compared to just 64% of non-AI-adopting firms.

When asked how they would allocate an incremental dollar of investment, the difference becomes even clearer. AI-using firms are more than three times as likely to allocate that dollar to AI-related capital expenditures (21% vs. 6%) and twice as likely to invest in broader information technology. Forty-one percent of non-AI firms are more likely to hold additional cash rather than reinvest it compared to 34% of those using AI.

What this means for middle market leaders

Taken together, these findings suggest that AI adoption in the middle market is acting as a proxy for organizational readiness. The firms using AI tend to be larger, faster-growing, and more confident. They are also more deliberate. They invest in talent alongside technology. They pair innovation with risk management. And they view digital capabilities as a long-term strategic asset, not a short-term experiment.

For middle market leaders who have not yet moved beyond AI exploration, the takeaway is not that every firm needs the same tools tomorrow. It is that AI adoption increasingly reflects how companies allocate capital, develop talent, and position themselves for growth in a volatile and competitive environment.

While the performance gap is visible in the data from our December 2025 survey, the Center will be keeping a close eye on how these trends evolve in our next wave of the Middle Market Indicator coming in July 2026.


 

Kim Roseler 

Program Manager
National Center for the Middle Market