New Haven, Nov. 13 -- Growing concentration in the artificial intelligence (AI) industry could widen economic inequality in the United States by allowing a handful of dominant companies to capture most of the technology's financial gains, while leaving smaller businesses and their workers with fewer opportunities, Federal Reserve Governor Michael S. Barr warned.

Speaking at Yale University on Thursday, Barr said AI's reliance on data, computing power and continuous model improvements could give leading companies an advantage that smaller businesses may struggle to match.

"If a small number of AI firms dominate the market and receive the lion's share of investment returns, then the wealth of the managers and owners of these firms will su...