Citadel Securities links AI to record 5.6m US business applications
Artificial intelligence is lowering barriers to entry and driving a record wave of US business formation, reshaping the labor market from corporate employment to solo entrepreneurship.
US business applications reached 5.6 million in 2025, a stark increase from 3.5 million in 2019, driven by workers using artificial intelligence to launch solo ventures. This entrepreneurial surge suggests AI is restructuring the labor market faster than many forecasters expected.
In a July 4 note, Frank Flight, head of macro strategy at Citadel Securities, argued that automation is actively expanding the range of viable enterprises. "Automation can reduce the labor intensity of certain tasks, but in an economy with unusually high entrepreneurial velocity, it can also broaden the range of viable enterprise," he wrote.
This dynamic challenges the prevailing narrative that AI will primarily serve as a deflationary force through corporate job cuts. Rather than simply displacing workers, large language models are lowering the barriers to entry for solo enterprises. Professionals in highly exposed fields like law and advertising are using the technology to draft business plans and scale customer outreach without traditional corporate infrastructure.
The data supports this pivot. "There appears to be a positive correlation between new business creation and sector-level AI exposure," Flight said. "In other words, the sectors most exposed to AI are also seeing some of the strongest formation impulses."
"We've never created as many businesses," said Torsten Slok, chief economist at Apollo Global Management. "It does tell you that AI is playing a very big role."
The economic weight of this trend is substantial. Approximately 30 million solopreneurs now generate nearly 7% of US economic activity, a share projected to grow as AI tools become more sophisticated.
For market participants, this shift demands a recalibration of labor and consumption forecasts. Small businesses have long anchored employment, accounting for 46% of US jobs according to the Small Business Administration. If AI continues to fracture traditional corporate hierarchies in favor of independent operators, capital allocation models and workforce planning will need to account for a fundamentally different commercial landscape.
