Israel among global AI leaders, Microsoft report

Israel ranks among the world’s leading countries in developing AI models, building computing infrastructure, and adopting artificial intelligence applications, according to a new Microsoft report published over the weekend.

The report highlights that Israel is one of only seven countries worldwide with a locally developed model featured among the top 200 AI models globally, and that about one-third of Israelis regularly use AI tools.

“Israel is among the world’s leading countries in infrastructure, models, and implementation,” said Michal Braverman-Blumenstyk, Microsoft Corporate Vice President, CTO of Microsoft Security, and Managing Director of the Microsoft Israel R&D Center. “Israeli high-tech continues to be the engine of growth for the economy, and the work being done here in artificial intelligence demonstrates our strategic global role.

“We are already a cyber powerhouse, and we can, and must, also be an AI powerhouse. To ensure Israel’s leadership, a national plan is needed to invest in human capital, education, and technological infrastructure. Through collaboration between government, academia, and industry, we can realize this potential and secure Israel’s position as a leading technological power.”

The AI Diffusion Report is based on global usage data from leading AI platforms such as OpenAI’s ChatGPT, Microsoft Copilot, Anthropic’s Claude, and Google’s Gemini. It measures global AI progress through three main indices:

• Frontier Index - assessing the most advanced AI models by performance and innovation.
• Infrastructure Index - tracking where the computing infrastructure to train and deploy these models is located.
• Adoption Index - measuring AI usage among end users.

According to the Frontier Index, Israel is seventh globally, among only seven countries with models that rank in the world’s top 200. These “frontier models” are the most advanced, driving breakthroughs in knowledge, programming, information retrieval, and reasoning.

Israel’s most advanced model, AI21 Labs’ Jamba Large 1.7, is only 11.6 months behind OpenAI’s GPT-5, which ranks first. By comparison, the second-place model, DeepSeek V3.1 Terminus, trails GPT-5 by 5.3 months.

“Only seven countries currently host leading models, the United States, China, South Korea, France, the United Kingdom, Canada, and Israel, and the performance gap is narrowing,” the report said. “The acceleration suggests AI penetration is occurring faster than in previous technological revolutions.”

While the United States and China together hold around 86% of global data center capacity, Israel is identified as one of the most advanced AI infrastructure hubs outside the major powers. Microsoft attributes this to Israel’s strong digital education, technological talent, and computing infrastructure, which enable the country to develop and deploy AI models at scale.

In the Adoption Index, Israel ranks 15th globally, with an AI adoption rate of 33.9% among adults. By comparison, the United Arab Emirates leads with 59.4%, followed by Singapore (58.6%), Norway (45.3%), Ireland (41.7%), and France (40.9%).

Interestingly, countries that lead in developing AI models, the U.S. (26.3%) and China (15.4%), show much lower adoption rates. When comparing adoption levels with GDP, Israel ranks above the global trend line, alongside the UK, New Zealand, and Belgium, indicating that it outperforms wealthier economies in AI use.

Globally, the report finds that AI is being adopted faster than any general-purpose technology in history, reaching 1.2 billion users within three years. For comparison, technologies such as electricity, the internet, radio, and smartphones took decades to achieve similar penetration.

However, the report also warns that uneven access persists. “In some countries, such as the UAE and Singapore, over half of the working-age population uses AI,” it notes. “But in parts of sub-Saharan Africa and Asia, adoption remains below 10%. The gap reflects disparities not only in access to tools but also in infrastructure, education, and language.”

Microsoft estimates that nearly four billion people still lack the basic requirements, such as electricity, internet connectivity, or digital literacy, to use AI tools effectively.

Alon Haimovich, General Manager of Microsoft Israel, said the findings reflect a shift toward viewing AI as essential infrastructure, similar to electricity or the internet.

“Israel is at the forefront of AI adoption alongside superpowers like the U.S. and China, and that’s a huge advantage,” Haimovich said. “To maintain our lead, we must take a responsible and focused approach, investing in model development, expanding access to global infrastructure for startups and researchers, and strengthening digital education and professional training.”