US Federal AI Spending: The Pentagon Now Captures 98.9% of the Market — and Its Share Is Still Rising
According to a Brookings Institution analysis, the potential value of US federal AI contracts rose from $4.6B to $91.8B between 2024 and 2026 — while the Department of Defense's share climbed from 93.5% to 98.9%. This is not a plateauing concentration; it is deepening.
An analysis published May 18, 2026 by the Brookings Institution (Denford, Dawson & Desouza) quantifies US federal AI spending: obligated funds rose from $675M in 2024 to $7.2B in 2026 (+966%), while the potential award value of contracts (including contract ceilings) jumped from $4.6B to $91.8B (+1,912%). Twenty-eight federal agencies were involved.
The notable point is not just the growth — it's the distribution. The Department of Defense (DoD) already captured $4.3B of the $4.6B in potential value in 2024, or 93.5% of the total. In 2026, it captures $90.7B of $91.8B, or 98.9%. The other 27 agencies combined — HHS ($138M), NASA ($45M, down from 2024), and 25 others — share less than $1.2B.
Another notable gap: of the $91.8B in potential value, only $7.2B was actually obligated — a ratio of 12.75x. A large share of this "spending" corresponds to contract ceilings (IDIQ-type vehicles) rather than firm spending commitments.
For AI suppliers positioned in aerospace and defense, these two figures — a deepening buyer concentration and the gap between ceiling and actual spend — bear directly on how commercial risk should be read. Our full analysis details the economic reading of this phenomenon.
Analysis by
Cardan-AI Intelligence
Our research and analysis unit, dedicated to applied AI for business, industry and regulatory compliance.
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