Artificial intelligence is driving a remarkable increase in solo entrepreneurship, with one‑person business applications rising more than 20% since early 2025, according to a new report from the Nasdaq Economic Institute.
The institute’s report is the first in a series examining AI’s impact on the economy and markets, beginning with business formation. “We wanted to see how AI is reshaping the foundations of the global economy,” said Nasdaq U.S. Economist and Senior Director Michael Normyle. “Business formation is the initial step a company takes toward accessing public‑market capital, so we’re starting at the ground level.”
Normyle explained that the growth is concentrated in high‑AI‑adoption sectors. “When we analyze Census data, the increase comes primarily from one‑person operations in industries that have embraced AI,” he said. “The timing coincides with the emergence of agentic AI tools and a leap in generative‑AI quality, lowering the barrier to entry.”
With a $200‑per‑month AI subscription, a solo consultant can now match—or exceed—the output of a small team, eliminating the need to hire additional staff to launch a business.
High‑adoption sectors have also been the most productive over the past two decades, posting 2.2% annual productivity growth (a 56% cumulative increase) compared with 1.6% in medium‑adoption sectors and a slight decline in low‑adoption sectors. Concentrating new firms in these high‑adoption areas could have a material impact on the broader economy, as thousands of startups that might not have existed otherwise begin to emerge.
The Census classifies business applications into “high propensity”—those likely to hire employees such as new restaurants or manufacturing firms—and “all other,” which includes sole proprietors, single‑member LLCs, independent contractors, and online sellers. Since early 2025, overall business formation has risen, but the high‑propensity segment remains flat. Almost all of the acceleration comes from the “all other” category, where one‑person formations are up over 20%.
Mapping these filings to AI adoption rates shows that roughly half of the new businesses originate in high‑AI‑adoption sectors like technology, finance, and professional services.
Normyle noted that the trend is unlikely to be driven by tax or regulatory changes. “Business formation data has been stable for years. After a gentle upward trend before COVID and a long sideways period, we saw a clear upward shift early last year, suggesting a new factor at play.” He added that while retail‑related filings surged due to temporary tax relief measures, those effects are now fading, leaving AI‑driven growth as the dominant force.
These solo operations may eventually expand and hire staff, contributing to job creation. The lowered cost of AI subscriptions also enables “marginal entrepreneurs”—individuals with ideas but previously unable to afford office space or assistance—to launch ventures, especially if they are currently unemployed.
In the long run, a larger pool of startups could translate into more companies seeking capital in public markets and potentially pursuing IPOs, influencing overall capital formation.
Looking ahead, the Nasdaq Economic Institute will continue its research agenda on capital formation, market modernization, and financial resilience, with the AI series exploring further effects on the economy and financial markets.
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