Analysis
Moonshots and bottlenecks: Inside Israel’s new AI strategy
With a $15B private sector boom, the state races to catch up.
Israel has emerged as a global leader in artificial intelligence innovation, but its public institutions are lagging behind in harnessing the technology’s full societal and economic potential. That’s the central conclusion of the 2025 AI Status Report, released last week by the Israel Innovation Authority and prepared by the National AI Program Directorate.
Drawing on interviews, market analyses, and international comparisons, the report offers one of the most in-depth assessments of Israel’s AI landscape to date. It presents a dual narrative: on the one hand, a vibrant, investment-rich startup ecosystem and world-class human capital; on the other, a government still in the early stages of preparing for AI’s far-reaching implications.
Over the past decade, Israeli AI startups have raised approximately $15 billion in private investment, buoyed by a surge in new company formation and Israel’s consistently high rankings in AI-related talent. This success positions Israel firmly as an AI producer on the world stage.
But when it comes to implementing AI across government and society, as an AI taker, the report finds that Israel is only beginning to mobilize. The rise of generative AI, which has rapidly matured since entering the public arena two and a half years ago, is expected to transform sectors from healthcare to defense. Yet the country, according to the report, remains underprepared for these changes.
The message in the report is clear: “There is now an urgent need to leverage this technology to its full socio-economic potential and to prepare Israel’s economy for the upcoming wave of change.”
In response, the report outlines the next phase of Israel’s National AI Program, which spans several ministries and government bodies, including the Ministry of Innovation, Science and Technology; the Council for Higher Education; the Directorate of Defense R&D; the National Digital Agency; and the Ministry of Finance.
The centerpiece of this effort is the launch of "Moonshot" projects, large-scale AI research initiatives backed by approximately NIS 90 million over the coming years. These projects, designed to push the frontiers of global AI technology, will be powered by Israel’s newly launched national supercomputer and advanced public data repositories. They are intended to support high-impact research and foster collaboration between government, academia, and industry.
A separate initiative will see the establishment of a National AI Research Institute, focusing on both basic and applied research. The goal is to attract leading international researchers and create a hub for interdisciplinary, long-term collaboration, positioning Israel’s research capabilities more prominently on the global map.
The report also outlines plans to develop sector-specific “data assets” in fields where Israel has unique domain expertise, such as agriculture, climate, and education. These assets aim to consolidate fragmented datasets, make them accessible for research and development, and ensure responsible use through safeguards around privacy, intellectual property, and security. The initiative includes R&D support services for researchers and companies looking to tap into these data reservoirs for innovation.
Despite its global leadership in AI talent density and quality, Israel faces a widening gap in the number of trained professionals required to meet surging demand. The report highlights the need to expand the number of AI experts in Israel through new, targeted programs.
These include:
- An advanced academic training track within the IDF
- Scholarships to increase the number of graduate students in AI-related fields
- Upskilling programs for existing professionals with science and technology backgrounds
- A talent attraction effort aimed at bringing international experts into the Israeli ecosystem
