Israel’s AI industry captures 89% of high-tech investment as funding surges to $11.8 billion
Nearly 3,000 AI companies are now operating in Israel, with late-stage funding accounting for more than half of the capital raised in 2025, according to a new report.
Israel’s artificial intelligence industry has recorded an unprecedented surge, becoming the main, and almost exclusive, growth engine of the country’s high-tech sector. The rapid expansion of the field is reflected in the volume of capital flowing into it: in 2025, approximately $11.8 billion was invested in Israeli AI companies across roughly 500 funding rounds.
That figure accounted for approximately 89% of all investment in Israeli high-tech last year, up sharply from 58% in 2024. The shift illustrates how AI has become the dominant destination for private capital in Israel’s technology market.
Some 2,948 AI companies are currently operating in Israel, accounting for roughly one-third of all high-tech companies in the country. Of these, 365 are classified as core AI companies that independently develop infrastructure, language models and other foundational technologies.
The market is also showing signs of maturation. About 57% of the capital raised by Israeli AI companies in 2025 went to late-stage rounds, suggesting that a growing share of the sector has moved beyond the earliest stages of development. A total of 1,281 funds and investors participated in the financing rounds, more than half of them foreign investors.
Israel ranks first globally in collaboration between academia and industry, according to the WIPO index, and also ranks first in the concentration of AI talent among LinkedIn users, with approximately 2.1% of users in the field. It ranks seventh in Tortoise Media’s global AI index and eighth worldwide in private venture capital investment in AI, according to Stanford University’s index.
According to the second annual report by the DatA-IL community, a joint initiative of the Ministry of Economy and Industry, the Israel Innovation Authority, the National Digital Agency and SFI Group, prepared in collaboration with research firm IVC, the government has also expanded its involvement. It approved a National Artificial Intelligence Plan that defines AI as a geopolitical and security asset and established a National Artificial Intelligence Directorate in the Prime Minister’s Office, backed by a budget of NIS 120 million.
