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Which firms invest in artificial intelligence (AI) technologies, and how do these investments affect individual firms and industries? We provide a comprehensive picture of the use of AI technologies and their impact among US firms over the last decade, using a unique combina- tion of job postings and individual-level employment profiles. We introduce a novel measure of investments in AI technologies based on human capital and document that larger firms with higher sales, markups, and cash holdings tend to invest more in AI. Firms that invest in AI ex- perience faster growth in both sales and employment, which translates into analogous growth at the industry level. The positive effects are concentrated among the ex ante largest firms, lead- ing to a positive correlation between AI investments and an increase in industry concentration. However, the increase in concentration is not accompanied by either increased markups or in- creased productivity. Instead, firms tend to expand into new product and geographic markets. Our results are robust to instrumenting firm-level AI investments with foreign industry-level AI investments and with local variation in industry-level AI investments, and to controlling for investments in general information technology and robotics. We also document consistent patterns across measures of AI using firms’ demand for AI talent (job postings) and actual AI talent (resumes). Overall, our findings support the view that new technologies, such as AI, increase the scale of the most productive firms and contribute to the rise of superstar firms.




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