More public companies are warning investors about the risks tied to artificial intelligence in their latest SEC filings, reflecting growing concerns over the technology’s potential to disrupt operations, damage reputations, and expose businesses to legal and financial harm. According to an analysis by AlphaSense, 418 companies with market values exceeding $1 billion have now included AI-related risk factors in their 2025 filings—marking a 46% increase from 2024 and nearly nine times the number from 2023. These disclosures highlight a range of potential dangers, including biased or inaccurate AI-generated content, data breaches, intellectual property violations, and reputational damage. For example, Take-Two Interactive Software expanded its AI risk disclosure in its 2025 filing by more than double the word count compared to the previous year, acknowledging the growing use of AI in game development and the associated risks. CEO Strauss Zelnick told Business Insider that as AI adoption accelerates, so too does the potential for harm, even as the technology improves efficiency and creativity. The warnings span industries. Visa’s recent filing notes that as it scales the use of agentic AI in financial transactions, it may face more errors, disputed payments, and chargebacks, all of which could damage its brand. Clorox warned that AI tools could expose sensitive or confidential information, while cosmetics company ELF Beauty cited the risk of failing to keep pace with evolving AI regulations, ethical standards, and stakeholder expectations. Legal experts say these disclosures are not just formality—they are a direct response to the need to inform investors about “known unknowns.” M. Todd Henderson, a law professor at the University of Chicago Law School, said the current wave of AI risk warnings is more serious and widespread than the cautious optimism seen during the internet boom in the late 1990s. “Back then, the threat seemed limited to a few sectors,” he said. “Now, AI is seen as a potential threat to nearly every business, with risks that go beyond data loss to include life-altering errors—like bad medical advice or flawed engineering decisions.” Employee misuse of AI adds another layer of risk. A global survey of over 32,000 workers conducted by KPMG and the University of Melbourne found that 66% used AI outputs without verifying their accuracy, and 72% admitted to putting in less effort due to reliance on AI tools. Despite these concerns, companies continue to invest heavily in AI, driven by its potential to boost productivity and innovation. Bain & Co. reports that average AI spending nearly doubled in 2024, reaching $10.3 million per company across a broad revenue range. At Take-Two, Zelnick emphasized that AI helps reduce repetitive tasks, freeing employees to focus on more creative work—such as using AI to generate entire levels in mobile games. Still, the dilemma remains: failing to adopt AI could leave companies behind, while embracing it carries substantial risks. As Zelnick noted, “Not using new technology could be just as dangerous as using it poorly.”