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.
Let's talk about your next competitive edge
Thirty minutes to identify the two or three use cases in your operations that pay for themselves within the first year.