This year the index expands the list of countries covered to 93, with new indicators and improved data organised across three pillars and seven sub-pillars.
Asian countries are rising through the ranks of this year’s Observer Global AI Index, led by rapid gains from the UAE, Taiwan and South Korea. And while the US is leading the AI race by a wide margin, China is catching up faster than ever.
Why this matters. Europe is lagging behind. Despite hosting world-class AI talent, European countries – including the UK – risk missing out on the development of the most fundamental general-purpose technology since electricity. The gap is widening in:
• Investment: the US absorbed roughly 90% of all private funding for AI in the first nine months of 2025. Europe attracted just 3.8%, and Asia 2.9%.
• Academia: the EU’s share of papers at major AI conferences has dropped from 16% to 12%.
• Frontier models: Europe is losing ground in the race to build foundational AI systems, producing just 13% of state-of-the-art models.
Treading water. The UK and France stand out in Europe for their political commitments to AI: President Emmanuel Macron announced €110bn in new investment earlier this year and Keir Starmer, the UK prime minister, launched a national AI action plan. In this year’s Index, the UK remained in 4th place thanks to its deep AI talent base and research strength. But its lead over France is fragile: the UK retains less than half of its academic AI researchers, most of whom move to the US, and only about 15% of top industry researchers work at UK-headquartered companies.
Growing gulf. Saudi Arabia and the UAE repeatedly made headlines this year with huge AI investment drives. Saudi Arabia launched Humain, a multibillion-dollar company, while G42, the state-backed Emirati giant, expanded its global portfolio of projects across Angola, Kazakhstan and Ghana, to name a few.
Their results have diverged. Saudi Arabia remains in 14th place, held back by a shortage of skilled talent that limits what its spending can achieve, while the UAE has surged ahead, rising 11 places to 9th thanks to huge investment in computing infrastructure and rapid nationwide adoption of AI, which is now used by more than half its population.
The energy bottleneck. Data centre demand is growing so fast that electricity generation can’t keep up. The International Energy Agency predicts that data centre power consumption will double globally by 2030 to 945TWh (terawatt hours) – more than the entire electricity consumption of Japan. This means AI chips are becoming less sought-after than the energy required to use them. Thanks to China’s advances in solar and wind energy, its edge over the US in this area is growing, contributing to a 20-point jump in our index score. The US – still in the lead – is ahead on the development of data centre infrastructure, as well as cutting-edge AI chips and frontier models.
Stellar spending. It’s a feverish time for private AI investment. Despite the technology’s speculative nature – and the fact that companies such as OpenAI are burning through up to $5bn a year – investors continue to pile in. Private funding for generative AI kept rising and now makes up 77% of all AI investment, up from 56% in 2024.
Governments treating AI infrastructure as a strategic asset. Stargate UAE – a $20bn infrastructure project backed by OpenAI and now supported by a new multi-year South Korean partnership – aims to build the largest AI data centre cluster outside the US. Similar multibillion-dollar initiatives are emerging elsewhere, including a $10bn centre project in Portugal and a $15bn data hub in Visakhapatnam, India.
More and more. AI adoption keeps accelerating, even as companies struggle to find viable business models. According to index data, more than a billion people and businesses are now using AI. The sticking point is trust. In most high-income countries, more than half of those surveyed say they feel uneasy about the technology – especially its potential to disseminate disinformation.
To see the full ranking, visit: observer.co.uk/data/global-ai
Authors: Serena Cesareo, senior researcher; Joe White, senior data scientist; Hannah Schuller, researcher
Illustration by Observer DesignÂ