As cities look to expand artificial intelligence (AI) across public services, infrastructure and government operations, new opportunities could emerge for technology providers and government contractors supporting municipal projects. A recent ThoughtLab study identified six U.S. cities among 37 global AI leaders, highlighting the growing need for investments in data infrastructure, cybersecurity, workforce development and public-private partnerships to support broader adoption.
ThoughtLab evaluated cities across six global regions. Researchers assessed their progress across eight areas, including technology infrastructure, governance, human-centered design, workforce development and partnerships.
The six American cities identified include:
- Austin
- Boston
- San Francisco
- San Jose
- Seattle
- Washington, D.C.
The research finds these cities stand out not only for testing individual AI applications but also for working toward integrated systems that connect departments, services and infrastructure. According to ThoughtLab, 95 percent of AI leaders integrate AI across departments and maintain high-quality, integrated data. Data management is already one of the most common applications of AI among cities, while modernizing legacy IT systems is a priority for many leading municipalities.
These findings point to potential contracting opportunities in data integration, cloud infrastructure, enterprise IT modernization, digital platforms and systems integration.
Smart infrastructure represents another opportunity. ThoughtLab found that 80 percent of cities use AI for infrastructure management, while 54 percent use it for predictive asset maintenance. Half of surveyed cities also use AI for infrastructure resilience and water, wastewater and utility management.
Transportation and mobility represent additional areas of AI adoption. ThoughtLab found that 70 percent of cities use AI for networkwide traffic management, 64 percent for public transportation and 49 percent for mobility platforms and digital twins.
Cybersecurity and public safety are also major areas of AI adoption. The research finds that 73 percent of cities use AI for cybersecurity and digital safety. More than half also use AI for disaster risk and early warning (58 percent) and surveillance and situational awareness (56 percent).
Public-private partnerships (P3s) and innovative commercial models are another common factor among AI-leading cities. According to ThoughtLab:
- 95 percent of leaders build broad partner ecosystems.
- 97 percent partner with universities on AI talent.
- 92 percent pool resources with other cities.
- 86 percent use P3s and innovative commercial models.
These partnerships could extend beyond traditional technology vendors to include companies developing AI platforms, engineering firms integrating AI into infrastructure, cybersecurity providers, consultants supporting AI strategy and universities helping develop AI talent.
Funding and workforce challenges remain major barriers to AI implementation. ThoughtLab found that 84 percent of cities cited long-term or unexpected costs as a challenge, while 82 percent pointed to limited AI skills and talent. Other concerns include competing budget priorities, privacy fears, siloed data and difficulty justifying returns on investment.
Many cities still need to establish the foundations for broader AI adoption. ThoughtLab’s research found that the average city scored 49 out of 100 in AI maturity, while only 27 percent have an integrated, citywide AI strategy. When it comes to leadership, 58 percent have a designated citywide AI leader and 45 percent have a citywide AI governance body. The report recommends establishing AI leadership and governance policies, modernizing IT infrastructure, developing the workforce and creating implementation plans to help cities scale their AI initiatives.
As cities continue expanding AI applications across infrastructure, transportation and public services, the need for technology investments and implementation support could grow. For government contractors, opportunities may extend beyond supplying AI tools to helping municipalities modernize the underlying systems, infrastructure and operations needed to put the technology to work.
Photo by Tara Winstead from Pexels
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