New data reveals Canadian businesses are adopting artificial intelligence at an unprecedented rate - faster than the global uptake of the internet.
According to Unlocking Canada's AI Potential, conducted by Strand Partners for AWS, about 650,000 Canadian businesses now use AI, including 160,000 new adopters in the past year. This represents 33% year-over-year growth, or one new adopter AI every three minutes.
The findings also show significant economic benefits: 89% of AI-using companies report revenue growth, averaging a 26% increase tied to AI-enabled improvements, and 73% report significant productivity gains. Optimism is high, with 81% of leaders expecting AI to boost growth next year.
However, to unlock AI’s full potential, the report suggests Canada must tackle three critical issues: creating a pro-innovation environment that attracts global investment; closing the digital skills gap; and accelerating adoption across sectors and business sizes through public sector leadership.
Uneven Adoption Risks Sparking a Two-Tier Economy
AI adoption is accelerating, but how organizations use it still varies widely.
Most businesses (65%) remain focused on basic applications (workflow automation, content generation, and other early-stage uses) which deliver value but only incremental gains.
Fewer (20%) are integrating AI across multiple functions, and only 15% are using it to redesign operations, launch new products or build models tailored to their business.
Startups are moving much faster, with 31% leveraging AI for its most advanced uses. Free from legacy systems, they embed AI into their business models from day one, are more likely to have a clear AI strategy, and are more confident AI will reshape their industries within five years.
If this gap continues to widen, Canada risks a two-tiered AI economy - one that could undermine long-term competitiveness.
“Canada is at a crossroads,” said Eric Gales, Managing Director, AWS Canada. “Startups are building with AI from day one, but many businesses are moving cautiously. If we allow that gap to become structural, we risk a future where only a subset of companies benefit from AI-driven growth and the rest fall further behind.”
Barriers to Deeper Adoption
Despite rising interest, four barriers continue to slow AI adoption in Canada:
- Skills Gaps - The biggest hurdle is talent: 51% say skills shortages prevent them from adopting or expanding AI, and only 29% feel prepared. Companies expect AI literacy to be critical for 40% of jobs within three years.
- Rising Compliance Costs - Businesses estimate $36 of every $100 in tech spend goes to compliance (higher than many G7 peers) and three-quarters expect those costs to keep rising as AI regulation becomes a priority.
- Regulatory Uncertainty - Without clear AI-specific rules, uncertainty is slowing decisions. 56% worry new regulation will hinder innovation, and 46% cite a lack of legal clarity for deploying AI.
- Perceived Costs - Nearly 49% cite upfront costs and 46% want clearer ROI—despite 89% of adopters reporting revenue gains averaging 26%.
Together, these barriers risk slowing Canada’s AI momentum unless businesses and policymakers work together to close skills gaps, reduce uncertainty and accelerate responsible adoption.
What Canadian Businesses Prioritize When Adopting AI
Canadian businesses say they are being strategic in how they adopt AI, prioritizing choice and flexibility. Four in five leaders view access to both Canadian and global AI providers as essential, and two-thirds prefer a hybrid model that blends domestic tools with those built or hosted internationally.
They want the freedom to choose the right tool for each task and adjust those choices as technology and business needs evolve.
Key Steps to Unlocking Canada’s AI Potential Now
Canada’s momentum is real but scaling it requires coordinated effort. AWS is calling on policymakers to prioritize four key measures to unlock the Canada’s full AI potential:
- Strengthen AI and digital skills: More than half of Canadian businesses say skills shortages are limiting progress. Expanding access to flexible, job-aligned training is essential to help workers succeed and businesses grow.
- Turn research strength into commercialization: Canada excels in AI research but must better convert it into scale. Improving funding access, supporting high-growth firms, and helping innovators reach global markets will ensure Canadian technologies are built and scaled here.
- Create a predictable, pro-innovation environment: Businesses want clarity and confidence. Regulatory frameworks should support responsible adoption without adding friction that slows innovation or competitiveness, making Canada a more attractive destination for global investment.
- Lead through public sector adoption: 64% of businesses say they are more likely to adopt/expand their AI use when government leads, and 53% of startups say that public sector adoption is crucial to their ability to scale. Modernizing services with responsible AI builds trust, accelerates adoption and improves the services Canadians rely on.
Enhancing Canada’s AI Competitiveness
“Canada has the foundation—leading research, talent, infrastructure, and entrepreneurship—to compete globally in AI. The opportunity now is to connect these strengths, close innovation gaps, and unlock the country’s full potential,” said Gales.
AWS is committed to working with Canadian governments to build a competitive environment and support broad AI adoption. This includes investing approximately $24.8B in building and operating its Montreal and Calgary Infrastructure Regions by 2037—supporting more than 9,300 FTE Canadian jobs annually and adding $43.02 billion to Canada’s GDP.
Since 2017, AWS has trained over 300,000 Canadians in sought-after cloud and AI skills. To help researchers accelerate the speed of discoveries with AI, AWS and the University of Alberta launched the Artificial Intelligence Discovery Place (AIDP). While programs like AWS Activate support with credits, funding and mentorship, helping startups build in Canada and scale globally.
Read the full report: Unlocking Canada’s AI Ambitions. Find out more about the latest news at Amazon.
