Artificial intelligence (AI) is no longer a buzzword reserved for Silicon Valley boardrooms or science fiction novels. In 2025, AI is quietly—and sometimes not so quietly—reshaping the way American businesses operate, from the bustling service firms of New York to the ever-expanding retail media networks powering your favorite supermarket and streaming platform. But just how deeply is AI changing the landscape, and what does it mean for investors, marketers, and everyday shoppers?
According to a recent survey conducted by the Federal Reserve Bank of New York in August 2025, service firms in the New York and Northern New Jersey region have embraced AI at a pace that few could have predicted just a year ago. The survey, cited by ETF Trends, specifically excluded companies using AI as a mere search tool, focusing instead on those integrating AI into core business operations. The results were striking: the number of service firms implementing AI has surged between 2024 and 2025, and the momentum shows no signs of slowing. In fact, the New York Fed projects a further 4% rise in AI adoption among regional service firms over the next six months.
This isn’t just about automation or chatbots answering customer queries. Companies are leveraging AI for everything from predictive analytics to supply chain optimization, fraud detection, and dynamic pricing. The Alger team, as reported by ETF Trends, highlights that this deeper integration of AI is spurring investors and financial advisors to keep a close watch on firms that are not just dabbling in AI, but fundamentally transforming their operations with it. As demand continues to mount, portfolios invested in so-called AI hyperscalers and their beneficiaries “remain well positioned,” according to Alger’s analysis.
One investment vehicle riding this wave is the Alger AI Enablers & Adopters ETF (ALAI). The fund zeroes in on companies experiencing “positive dynamic change”—a term that, for ALAI’s team, refers to either “high unit volume growth” or “positive lifecycle change.” In layman’s terms, these are firms whose products and services are in high demand, or those benefiting from new leadership, regulations, or innovative breakthroughs. And the numbers back up the enthusiasm: as of October 8, 2025, ALAI has seen more than $200 million in net flows year-to-date, according to FactSet data cited by ETF Trends. That’s a clear vote of confidence from investors betting on the future of AI-driven business.
But the AI revolution isn’t confined to the back offices of service firms or the portfolios of Wall Street. It’s changing the way brands reach you, the consumer, every time you shop, whether online or in-store. Retail media spending—a sector encompassing everything from digital ads on retailer websites to in-store displays powered by digital technology—has skyrocketed from $30 billion in 2021 to an estimated $60.8 billion in 2025, according to eMarketer data reported by MediaPost. And if the forecasts hold, retail media spending is set to surpass $100 billion by 2029.
What’s fueling this explosive growth? AI, of course. Angus Frazer, co-founder of Sonder (a firm working with owned media brands), told MediaPost, “AI can be a powerful tool on a number of key objectives, including targeting, personalization, automation, efficiency, insights and planning.” When companies feed AI rich first-party data, it can match marketing objectives with data-enriched media placements, creating tailored and optimized ad plans in real time. Ben Johnsen, who heads strategy and planning at ad agency Kiosk, adds that AI enables brands to map the entire consumer journey, from first touch to final purchase, and even predict future buying behavior.
Yet, as advanced as these tools sound, AI adoption in retail media has actually lagged behind other paid media channels. The emphasis, so far, has been more on improving the retail experience itself—think smarter inventory management, loss prevention, and enhanced in-store experiences—than on flashy ad tech. Still, the tide is turning. Companies like Amazon and Walmart have started to incorporate AI in ways that go far beyond simple ad targeting. Amazon, for instance, uses generative AI to create lifestyle images and ad-ready videos from a single product photo, dramatically speeding up the creative process for brands. Walmart, meanwhile, now offers AI-powered search that lets users type in prompts like “barbecue for 12,” returning a ready-made shopping list that includes everything from grill utensils to the ingredients for s’mores.
As the number of retail media networks (RMNs) balloons—there are now more than 300, according to MediaPost—the competition for consumer attention is fierce. Johnsen points out that the fit and quality of a network’s audience will soon become a new kind of “currency” for marketers, with brands boasting strong customer loyalty, like Costco, holding a distinct advantage. The next frontier? Generative AI, which Ashwini Karandikar and Jeremy Lockhorn of the 4As describe as “the creative director of the next era.” Rather than just finding the right customer, generative AI is now building the creative assets that will reach them. This marks a radical shift, where the line between advertising and content creation is blurring.
But there’s another twist on the horizon. As AI-powered shopping agents become more common—think of digital assistants that shop on your behalf—the challenge for brands and retail media networks will be to influence not just human shoppers, but the algorithms themselves. “It won’t be about a sponsored product ad on a search results page; it will be about getting your brand’s data, value proposition and unique selling points into the ‘mind’ of the AI agent,” Karandikar and Lockhorn told MediaPost. In this emerging “Business to AI” (B2A) landscape, brands will compete for influence over digital agents as much as over human consumers.
Retail media is also making a comeback in the physical world. Frazer notes a trend toward omnichannel strategies that blend digital and in-store media, with store-based channels—once overlooked—now taking center stage. Johnsen highlights Walmart’s plan to expand its fuel and convenience stations by up to 450 locations, opening up fresh opportunities for advertisers to engage loyal customers in new settings. And with consumer privacy rules tightening and cookies on their way out, these physical touchpoints are becoming even more valuable.
Of course, none of this comes without risks. As ETF Trends and Alger warn, investing in AI-related companies brings its own set of challenges: rapid product obsolescence, intense competition, legal and regulatory scrutiny, and the ever-present danger of biased or faulty AI outputs. The market is volatile, and past performance is no guarantee of future results. Still, for now, the momentum is undeniable.
From Wall Street to Main Street, AI is rewriting the rules of business. Whether you’re an investor eyeing the next big opportunity, a marketer navigating an ever-shifting media landscape, or just a shopper noticing smarter ads and recommendations, the AI wave is here—and it’s only getting bigger.
