Opinion
Is Israel missing the AI infrastructure wave?
According to Chen Zvi, an investor at Hetz Ventures, the question isn't whether Israel is part of the AI revolution, but whether it can also grab a meaningful share of the infrastructure that powers it.
Israel is used to leading. Over two decades it built a global brand as the ‘Startup Nation’, a cyber powerhouse, and a hub for SaaS and data companies. But the current AI wave runs on more than software and models. Behind it sits a massive infrastructure layer of chips, compute, energy, cooling, and storage.
The question isn't whether Israel is part of the AI revolution, but whether it can also grab a meaningful share of the infrastructure that powers it.
Israel's edge took decades to build. Elite IDF tech units produced a deep bench of engineers and cyber specialists, who went on to found companies, raise capital, and train the next generation.
The payoff: tech now accounts for roughly 17% of GDP and more than half of exports. In 2025, Israeli companies raised $15.6 billion in venture capital, and exits hit approximately $80 billion.
Israel ranks as the world's fourth-largest tech hub by VC fundraising, and the largest outside the U.S. That's the direct output of an ecosystem built around software, data, and security.
The number of AI companies in Israel has nearly doubled since 2021, from roughly 1,250 to 2,350. Those companies have raised more than $30 billion, and about 60% of Israel's mega-rounds (above $50 million) went to AI startups.
Talent is another edge. Per the Stanford AI Index, Israel leads the world in the share of LinkedIn users with AI expertise, at about 2.1%.
The pace is only picking up, and recent mega-rounds show it. Decart, founded in 2023, is reportedly in talks to be acquired by Anthropic for $6 billion, which would be Anthropic's largest acquisition to date. Enigma, which builds AI models for smart robots, raised a $71 million seed round from investors and executives at OpenAI, Anthropic, and xAI. Corma, developing a dedicated foundation model for cyber defense, raised tens of millions from major funds. A separate mapping by the Israel Innovation Authority counted 123 Israeli companies in Physical AI, with cumulative investment north of $12 billion. More outsized rounds are likely on the way.
The five largest U.S. tech companies are set to pour roughly $650 billion into AI infrastructure in 2026 alone, nearly double 2025. Nvidia, which makes the chips the entire industry runs on, became the first company in history to cross a $4 trillion market cap in 2025.
Israel isn't just watching from the sidelines. Nvidia runs its largest development center outside the U.S. here, and plans to double its local headcount to 10,000 via a new campus in Kiryat Tivon. Nebius has built a dedicated data center here for model training. Majestic Labs, building an AI server with up to 128 terabytes of shared memory to crack the core bottleneck in large models, has raised $100 million and was named Globes' Promising Startup for 2026. More than 70 additional Israeli startups are active in data center infrastructure, energy, cooling, storage, and have raised over $4 billion combined. Still, that's a fraction of global investment volumes. Israel's entrepreneurial muscle is way ahead of its infrastructure muscle.
Bottom line: From talent to infrastructure
Israel isn't missing the AI wave, it just hasn't cashed in yet on the infrastructure layer. It has human capital ranked first in the world for AI talent density, deep experience in cyber and cloud, and now a geopolitical hook: in December 2025 Israel became a founding member of the Silica Pax alliance, which promises coordinated access to chips and advanced computing infrastructure. If these trends hold, Israel could become one of the world's key hubs for building the technology that powers the next generation of AI models.
Chen Zvi is an investor at Hetz Ventures.
