Jul 24, 2023 - Technology

AI boom's big winners are all in four states

Data: Forbes, Sequoia Capital, Meritech Capital; Chart: Axios Visuals
Data: Forbes, Sequoia Capital, Meritech Capital; Chart: Axios Visuals

The latest tech boom is highly concentrated: 60% of new generative AI job postings are located in just 15 metro areas — with San Francisco topping the list, per a new Brookings Institution report.

Why it matters: Generative AI may produce "winner-takes-most" economic outcomes, per the authors of the Brookings report, unless the government moves to foster a more broadly distributed AI sector.

Details: Nearly half of the generative AI job postings in the past year were in San Francisco, San Jose, New York, Los Angeles, Boston and Seattle. That extends previous trends in AI jobs and R&D.

By the numbers: The 43 U.S. members of the Forbes AI 50 list — a showcase of the promising AI companies — come from just four states.

  • The winning states are California (35), New York (4), Texas (2) and Massachusetts (1), with one company operating fully remotely.
  • None of the top 50 AI startups are in a Rust Belt state, the Midwest or the South.
  • San Francisco alone is home to 20 of the best-funded AI companies — more than the rest of America combined.
  • 18 out of 55 members from an alternative list, the IVP Enterprise 55, are San Francisco-based.

Be smart: U.S. high-tech industries have become increasingly concentrated in coastal cities in recent decades.

What they’re saying: Report authors Mark Muro, Julian Jacobs and Sifan Liu suggest that a "widely distributed" expansion of public sector AI research and access to computing to spread AI benefits away from "superstar cities."

  • Non-defense federal AI research spending flatlined at $1.7 billion in 2022.

Yes, but: It's early days in generative AI deployment, and wider deployment and adoption across the economy are likely to spread at least some of the economic benefit.

Flashback: The 1960s "space race" was a classic example of "place-based industrial policy," with federal investment transforming cities such as Huntsville, Alabama.

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