AI Adoption Globally and in Israel
Survey and Analysis - Georgian with NewtonX
Israel-based Analysis - Startup Nation Central
- September 3rd
Data analysis and insights
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Content
High-Tech: Powering Economic Growth, Exports and Stability
High-Tech’s Outsized Impact on Israel’s Tax Base and Economic Vitality
Israel’s Global Edge in R&D Specialization and ICT Expertise
Strategic MNC Partnerships Propel Innovation and Global Market Reach
Israel’s M&A Exits Reflect Sector Strength and Renewed Investor Confidence
Strategic Sectors and Strong Rounds Reinforce Israel’s Global Investment Appeal
A Global Innovation Powerhouse: Israel Leads Global Benchmarks in R&D and Tech Performance
Israeli NASDAQ Companies Rebound with Stronger Efficiency and Growth
Defense Innovation Drives Record Exports and Global Demand
Cybersecurity as a Pillar of Israel’s Tech Leadership and Global Strategic Value
Stabilizing Growth Drivers: Strengthening Talent, Startup Activity, and Innovation Capacity
Building the Foundations of Future Growth: A Human-Centered, AI-Driven Vision for National Innovation
The AI Divide: Two Paths to Innovation and Growth
Yariv Lotan
VP of Product and Data, Startup Nation Central
In the relentless advance of technology, AI has emerged as a strategic force reshaping entire industries. This story of transformation is one of two distinct narratives unfolding across the globe. Established global companies are methodically integrating AI predominantly for efficiency, while in Israel, the startup nation, entrepreneurial fervor is leading innovation and growth. Beyond code and algorithms, this is about people, strategy, and the very future of how we create value.
The Global Story: A Quest for Efficiency
The global AI journey is a testament to the power of methodical implementation. Companies worldwide have moved past experimentation, with 83% now considering AI a top-five strategic priority. The focus is clear: to leverage AI for cost savings and internal productivity. This is evident in the adoption of AI tools to streamline operations in departments like HR, Legal, and IT. This cautious approach, however, has created a significant hurdle. Many businesses are struggling to connect their AI investments to concrete, measurable business value, with over half of R&D executives admitting they don’t have clear KPIs. The journey is further complicated by a persistent talent gap, with a lack of skilled professionals cited by 45% of R&D respondents as a primary barrier to scaling AI initiatives. This story is one of pragmatic progress – a steady, deliberate path that risks overlooking breakthrough innovation.
Israel's Story: The Applied AI Powerhouse
Israel, by contrast, is writing a different story of unprecedented AI density and an unwavering focus on applied innovation. Its exceptional entrepreneurial DNA has resulted in a vibrant ecosystem of AI-driven companies. While global giants focus on foundational AI, Israel distinguishes itself through applied AI, leveraging models to solve novel and specific challenges across diverse sectors. This approach has proven value, demonstrated by the fact that Israeli AI companies are four times more likely to be acquired by top multinational corporations compared to their non-AI counterparts. This success is fueled by a profound belief in the power of in-house development and a growth-first strategy. Israeli firms are less focused on operational efficiency and more focused on market expansion and redefining the user experience. This translates to a stronger conviction in AI’s business impact, as executives are more confident in its ability to drive measurable revenue gains. They see AI not as a tool for minor improvements, but as a catalyst for a fundamental re-imagination of product and service delivery.
The Path Forward: Redefining Value
The convergence of these two stories reveals a critical opportunity. The global focus on efficiency provides a solid foundation, while Israel’s pioneering approach offers a glimpse into the next wave of AI value creation. The future of AI will not be about incremental gains; it will be about redefining the user experience, ensuring data ownership and safety, and delivering sustainable business value. The need for predictability and clear guardrails for AI systems is vital to this new understanding of how data flows, which involves a bi-directional transformation between structured and unstructured data. This is the key to creating personalized applications that solve well-defined user needs.
For founders, this is the new playbook: the long-term value lies not only in the model itself, but in the data moat you build by creating systems that strategically capture and curate a unique combination of contextual data, user persona data, and application-specific data. It is this deep understanding of a user’s problem, powered by a profound plan for data ownership and safety, that creates true defensibility. This is also where investors will find their most compelling opportunities. The real power lies in the Applied AI Edge, found in ventures that move beyond generic augmentation to build solutions that apply these powerful models to solve highly specific, high-value problems in niche domains. These are the ventures with the clearest path to redefining an entire market and building a lasting advantage.
Partner Perspective
James Lamberti
Head of Go-to-Market, Georgian
At Georgian, we see AI adoption as central to both our investment thesis and the growth trajectory of our portfolio. Most of our companies today sit in the “walker” or “runner” stages of maturity, which aligns with our belief that competitive advantage increasingly depends on leveraging AI. “The companies that move fastest are the ones turning AI into real adoption and revenue,” James noted. Some of our portfolio companies are AI-first disruptors, others are embedding AI features into their offerings. Via Georgian’s AI Lab, we’ve also partnered with founders to build transformative solutions both with AI first portfolio companies and portfolio companies looking to add AI features to their existing platform quickly.
In the market more broadly, AI adoption is not uniform across sectors, but tends to cluster around specific “jobs-to-be-done.” Customer service was among the earliest areas to embrace AI, particularly in retail, e-commerce, and healthcare, where users were already accustomed to chatbots and the evolution to AI agents is a natural and more seamless use case. Sales and marketing are quickly following as indicated by the market trend around Vibe Go-to-market where AI plays a big role in content generation and outbound messaging. Cybersecurity, by contrast, has been more cautious, focusing on AI’s role in detecting and mitigating the new threat vector of AI itself. “It’s not about replacing humans everywhere, it’s about augmenting workflows where people struggle to keep pace without losing trust or reducing quality in the output,” James emphasized.
Our AI, Applied benchmark research, including surveys across global and Israeli ecosystems, reveals a striking polarization. Israel, for example, has more “crawlers” but also more “runners” than the rest of the world on average. This duality reflects differences in company size, leadership approach, and risk appetite. Larger organizations often focus on internal productivity use cases, while smaller, fast-moving startups push AI into core products and revenue drivers. Adoption often begins bottom-up, with individuals experimenting. “Many initiatives will ultimately fail to gain traction and this is OK, but the ones that do work can change a company’s trajectory overnight,” James explained. “This experimentation is vital and should continue with the goal of taking winning ideas and getting them into production more quickly.”
Looking ahead, Georgian sees the next waves of AI in infrastructure and developer tools enabling individual developer productivity to manifest in full R&D function productivity. Physical AI bridging robotics and AI software to transform industries like manufacturing and logistics is also an area to watch. “The companies that wait risk falling behind. AI is already changing competitive dynamics, those who adapt now will lead tomorrow,” James concluded.
Introduction
Over the past year, the global race to integrate artificial intelligence has accelerated, driven by advances in generative models and increasing organizational pressure to act. But how aligned are companies in their AI strategies? And where does Israel stand in relation to the rest of the world?
To answer these questions, this report draws on Georgian’s latest Global AI Adoption Survey, conducted in collaboration with NewtonX in June 2025. The study gathered insights from 634 senior technology executives across B2B and enterprise firms spanning R&D and go-to-market functions. For the first time, the survey includes data from Israeli companies, enabling direct regional comparisons with global peers.
The report benchmarks adoption patterns across both cohorts, Israel and the Rest of the World (RoW), highlighting strategic priorities, friction points, and what’s needed to shift from experimentation to impact.
Survey Background and Methodology
Participants completed a comprehensive online questionnaire covering AI investment priorities, deployment progress, use cases, perceived benefits, and implementation challenges. The sample includes a mix of 634 global respondents, among them 73 Israeli executives.
The report includes both global findings as well as findings segmented into two cohorts – Israel and RoW – to surface alignment, divergence, and emerging opportunity areas in how organizations approach and scale AI.
Key Global Findings
AI Becomes a Top Priority for Nearly All Organizations
83% of respondents now rank one of three AI initiatives among their top organizational priorities: optimizing internal efficiency with AI tools, building AI/ML models in-house, or deploying external AI features. 81% of companies now use AI to drive internal efficiency, making it the most common initiative, followed by internal model development (63%) and third-party AI deployment (43%). Notably, 31% of respondents prioritized both building AI/ML capabilities internally and deploying external AI/ML models or features through third-party solutions. This hybrid approach underscores the trend toward flexible, multi-channel AI adoption strategies, where organizations combine internal development with external partnerships to maximize efficiency and innovation.
Top 10 Organizational Priorities: |
|---|
1. Use of AI tools by internal teams to improve efficiency |
2. Building AI/ML models or product features internally |
3. Major market expansion |
4. Deploying an External AI/ML model or feature using third-party software or services |
5. Diversification of Revenue Streams |
6. Customer Experience Enhancement |
7. Brand Development and Positioning |
8. Tech stack upgrade or other major operational change |
9. Restructuring or reorganization plan |
10. Agile Transformation |
Deployment Extends from R&D into Sales, HR, and Security
AI integration now spans nine enterprise functions, with Data (analysis and insights) and Sales & Marketing remaining the most mature use cases. While overall deployment rates are relatively stable since November 2024, operational domains such as IT & Security, Legal, Customer Success, and HR have seen modest increases, reflecting a shift from AI as a purely R&D asset toward a broader tool for enterprise efficiency. This diffusion suggests growing organizational confidence in applying AI beyond technical teams, though progress remains uneven.
Shift from Revenue Growth to Cost Savings Signals AI’s Operational Turn
Across functions, increasing team productivity and creating a competitive advantage are the top motivations for applying AI. At the same time, there’s a noticeable shift away from revenue generation and toward cost savings, signaling a broader focus on operational efficiency. This trend is reinforced by rising AI adoption in internal functions like IT, HR, Legal, and Customer Success, where AI is being used to reduce manual tasks, speed up workflows, and cut operational costs. As companies move beyond experimentation, AI is increasingly seen as a tool to strengthen the backbone of the organization- not just boost the top line.
AI Deployment in R&D Shifts Toward Scalable, Service-Oriented Functions
AI is increasingly being deployed in production for customer-facing and perception-driven use cases- notably in customer support and image and video recognition. These areas reflect a broader enterprise focus on improving real-time responsiveness, user experience, and automation at scale- aligning with macro trends in digital service delivery and content intelligence.
Meanwhile, adoption in personalization and risk management shows signs of retreat. As regulatory pressure mounts and scrutiny around data privacy and algorithmic fairness intensifies, organizations appear more cautious about deploying AI in sensitive decision-making contexts, especially where transparency and auditability are critical.
The R&D landscape is bifurcating: AI is scaling rapidly in visible, high-volume service functions, while risk-heavy domains are advancing more conservatively amid growing trust and compliance concerns.
Surge in Use of Owned and Public Data for AI Model Training
The near-universal use of owned data and sharp rise in public data usage signal a broader shift toward more accessible and governable training sources. As foundational data reaches saturation, companies are beginning to diversify- tapping into third-party, synthetic, and dark data to extend model capabilities and mitigate data limitations.
This signals a more mature data strategy: one that prioritizes control and compliance, while gradually layering in alternative sources to fuel next-stage model performance.
Summary
Israel’s high-tech sector continues to anchor national resilience, with 2024 marking another year of growth and global competitiveness. Today, high tech generates 19% of GDP, employs 10% of the national workforce, and drives 56% of exports. These figures have nearly tripled since 1995. Its impact was especially visible in 2024, when the sector helped turn a projected 10% GDP deficit into a 3% surplus, fueled by the fact that 90% of its output is exported.
The sector’s fiscal weight is equally striking. Despite employing just one tenth of the workforce, it contributes over one quarter of Israel’s tax revenues. Capital markets echoed this strength: M&A deal value surged 165% year over year to $12.7 billion, while private funding climbed 27% to $10.6 billion. By 2025, Israel experienced one of the most active M&A periods in its history, totaling $63.9 billion, including two record-breaking deals, Google’s $32 billion acquisition of Wiz and Palo Alto Networks’ $25 billion purchase of CyberArk.
Israel’s edge lies in its unmatched innovation capacity. With 48% of high-tech employees working in R&D and ICT specialists making up 16.4% of the total workforce, Israel outpaces both the U.S. and EU. The Global Innovation Index 2024 places the country 3rd globally for key innovation inputs and 4th for outputs, highlighting world-leading rankings in venture capital intensity, university–industry collaboration, and ICT services exports.
Multinational corporations (MNCs) are another pillar of strength. They employ 33% of Israel’s tech workforce, generate 39% of sector GDP, and export 95% of their output, mostly to U.S. parent companies. Their presence has grown dramatically, from 174 R&D centers in 2014 to 429 in 2024, underscoring Israel’s deep integration into the global innovation economy.
Strategic sectors highlight this leadership on the world stage. Defense exports reached a record $14.8 billion in 2024, powered by global demand for Israeli-developed missile defense, radar, and electronic warfare systems. Cybersecurity also reinforced Israel’s leadership, with median funding rounds hitting $18 million, more than double the national median, reflecting investor confidence in the country’s critical expertise.
Yet challenges remain. The startup ecosystem saw its first net contraction in more than a decade, while geopolitical instability and reserve duty mobilization disrupted the talent pipeline. Looking ahead, sustaining momentum will require bold policy action: scaling inclusive talent pathways, strengthening collaboration between academia and industry, and investing in AI infrastructure to fuel the next wave of growth.
Taken together, these efforts will ensure Israel’s high-tech sector continues to serve not only as the backbone of its economy but also as a global source of innovation and resilience in an uncertain world.
Methodology Notes
- The report is based on the following sources:
- The Startup Nation Finder database.
- “The contribution of Israel’s High-Tech Sector to Economic Resilience and Macroeconomic Performance”, a paper published by the Aaron Institute for Economic Policy at Reichman University Policy Paper, April 2025.
- Pitchbook.
- The definition and criteria for companies, investors, and Multinationals (MNC’s) can be found in the Finder Glossary.
- Aggregate metrics may include rounds that are not visible in Finder, per the request of the profile owners.
- Funding Type definitions:
- Private Funding includes the following round types: Pre Seed, Seed, A, B, C, D, E, F, G Rounds, Convertible Debt, SAFE, Equity Crowdfunding, and Undisclosed rounds.
- Funding for Public companies includes the following event types: IPO (including IPO via SPAC or Reverse Merger), Non-Initial Public Offering, PIPE.
- The following events are excluded: Crowdfunding, Debt Financing, Secondary, and Grants.
More on the israeli tech ecosystem
About Startup Nation Central
Startup Nation Central is a free-acting NGO providing global solution seekers frictionless access to Israel’s bold and impatient innovators to help tackle the world’s most pressing challenges. Our free business engagement platform, Finder, grants unrestricted access to real-time, updated information and deep business insights into the Israeli tech ecosystem.
About The Aaron Institute for Economic Policy
The vision of the Aaron Institute for Economic Policy in the Tiomkin School of Economics is to support sustainable economic growth and social resilience, along with poverty reduction. To achieve these goals, the institution strives to design a strategy based on measurable goals, which can be subjected to international comparison, and propose detailed plans for economic policies based on the most updated international knowledge. We focus primarily on reforms towards economic growth stemming from increasing employment and raising the GDP per hour worked (labor productivity) in Israel.
The key measure of sustainable economic growth – GDP per capita – is still low in Israel compared to leading developed countries, and so is labor productivity. Through its economic studies, the Aaron Institute presents goals, innovative policy tools, and reforms to promote growth, high-quality employment, and labor productivity.
The Institute’s mission is to help shape the socioeconomic policy in Israel through the development of long-term plans that address the full range of economic and social issues facing the Israeli economy. Our main focus is families with less than median income, who comprise significant parts of the Arab and Haredi (ultra-Orthodox) populations. In these groups specifically, increasing employment and productivity would greatly contribute to achieving the goals of growth, social resilience, and poverty reduction. In addition, our studies aim to influence the professional discourse, and to stimulate discussion based on reliable information and socioeconomic research that offers practical tools to achieve these goals.
Board Members:
Mr. Shlomo Dovrat (Chairman), Mr. Jaron Lotan (Vice Chairman), Ms. Yael Andorn, Mr. Yarom Ariav, Mr. Gabi Ashkenazi, Ms. Dita Bronizki, Ms. Yael Dovrat, Prof. Zvi Eckstein, Prof. Martin Eichenbaum, Prof. Itay Goldstein, Mr. Koby Haber, Prof. Niron Hashai, Mr. Rony Hizkiyahu, Ms. Anat Levin, Prof. Rafi Melnick, Mr. Ronen Nir, Dr. Tali Regev, Mr. Haim Shani, Ms. Ofra Strauss, Mr. Imad Telhami.
Head:
Prof. Zvi Eckstein
Scientific Committee:
Prof. Zvi Eckstein (Chairman), Prof. Efraim Benmelech, Prof. Martin Eichenbaum, Dr. Assaf Eilat, Prof. Yaniv Grinstein, Prof. Zvi Hercowitz, Prof. Osnat Lifshitz, Prof. Rafi Melnick, Prof. Omer Moav, Dr. Tali Regev, Dr. Yaniv Yedid-Levi.
Contact details:
Reichman University, P.O. Box 167, Herzliya, ISRAEL 4610101
Phone: 972-9-9602431