Where does federal AI spending stand in 2026?

Source Domain: www.brookings.edu

In July 2025, the Trump administration released its blueprint for artificial intelligence (AI)—America’s AI Action Plan—with a focus on deregulation and infrastructure investment to achieve “global AI dominance.” The plan represents a notable shift from previous, more cautious AI policies of the Biden era and emphasizes removing regulatory barriers and “ideological” bias in AI. It does so through three pillars: accelerating AI innovation, building American AI infrastructure, and leading in international AI diplomacy and security.

This approach and the administration’s prioritization of AI in government suggest major increases in federal AI spending from the prior years—something we hypothesized in two previous reports on the subject. In our 2022 report, we noted a chaotic spending profile under then-President Biden and suggested it reflected an immature market. We then predicted the market would dramatically grow in future years but expressed concern that maintaining a chaotic approach would have negative outcomes, including China increasing its AI lead over the U.S.

In our 2024 report, we documented dramatic growth in AI investment and a concentration of spending on the U.S. Department of Defense. Our analysis revealed a noticeable shift from experimental, shorter duration contracts to multiyear contracts, likely reflecting a shift from pilot testing to implementation. While the market was still chaotic, we observed that larger vendors began to enter the market, suggesting that this would lead to both larger and longer contracts.

In this report, we analyze the federal AI spending plan for 2026, presumably under the direction of the administration’s AI Action Plan, to better understand how federal AI spending is evolving. Further, given that it is projected that worldwide AI spending will grow from $1.75 trillion in 2025 to $2.52 trillion in 2026 (a 44% year-over-year growth), we would also expect…

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