By Ross DeVol
Chairman Emeritus and Distinguished Fellow

The Austin metropolitan area’s diversified ecosystem ranks second in the heartland, behind Chicago, for its readiness to capitalize on AI using given local talent, innovation and adoption criteria. [AK1] Austin combines world-class research and computational infrastructure at the University of Texas, Austin (UT-Austin) and the Texas Advanced Computing Center (TACC) with a thriving startup scene, strong venture capital (VC) support and a diverse set of industries and firms actively deploying AI.

Austin’s concentration of high-tech industries is double the national average. This provides it with a deep talent pool, with 52% of the population over 25 years of age with a bachelor’s degree or above. Austin has a key advantage over coastal metros attributable to its semiconductor (fabrication plants) and hardware strengths, essential for supporting AI at scale. Samsung, NXP, AMD, Applied Materials, Tesla, Apple, IBM, Dell Technologies and others that have major operations in the region, Global firms and local innovators alike are embedding AI in robotics, logistics, health care, creative industries and smart city applications, while community hubs and accelerators knit together talent, funding and experimentation.

Additionally, Austin’s talent pool is highly technical with large numbers of graduates in computer science, technology, engineering and mathematics (CSTEM). There are 216,000 STEM graduates with a bachelor’s degree in the metro area. While there are fewer CSTEM degree holders in Austin than Chicago, these STEM graduates represent a greater portion of the Austin population at 8.5% versus 6.4% in the Chicago metro area. UT-Austin produces many graduates in STEM fields, but Austin is unique in its ability to attract STEM talent from other parts of the country, as well as in its number of PhD holders in STEM fields with nearly 2,100—more than triple the per capita rate of Chicago.

The University Effect:

Behind this CSTEM talent pool are university programs that build local talent, particularly with a focus on AI. For example, UT-Austin has developed a highly respected, Master of Science in artificial intelligence (MSAI) with most courses delivered online for working professionals. Further, UT-Austin has an online graduate certificate in AI & machine learning for professionals seeking upskilling without committing to a full master’s program, in addition to a computer science bachelor’s degree with a concentration in machine learning and AI. Austin Community College provides online executive education certificates in AI & machine learning and generative AI for business applications as well as micro-credentialling in applied AI.

In 2020 UT-Austin became the central hub for the Institute for Foundations of Machine Learning (IFML) designated by the National Science Foundation (NSF). Located at the Gates-Dell Complex at UT-Austin, IFML focuses on the next generation of artificial intelligence and is playing a vital role in developing more accurate AI systems including the mathematics of diffusion models, denoise images, algorithms that improve the speed and accuracy of magnetic resonance imaging (MRI) and biotech innovations set to revolutionize drug discovery and therapeutics. The Dell Medical School at UT-Austin is focused on  advancing AI in health care applications. UT-Austin also is home to the NSF-Simons AI Institute for Cosmic Origins (CosmicAI), which strives to advance transformative AI initiatives, reform research workflows and increase astronomy and AI accessibility through developments in four fundamental AI pillars: trustworthiness, robustness, explainability and efficiency.  The Machine Learning Laboratory at UT-Austin was launched to learn how to harness the mechanics of intelligence to improve the world around us. UT-Austin is building a large GPU cluster (600 NVIDIA H100s) at its new Center for Generative AI, enabling big model training and other computational-intensive AI research.

Off campus, the Texas Advanced Computing Center (TACC) in Austin powers AI-at-scale for the university and open-science users through its Vista AI-focused supercomputer (Grace/Grace Hopper architecture) and Frontera, the fastest academic supercomputer in the U.S., which supports AI-heavy science and engineering workload.

Regional Comparisons:

Behind this technology, however, is Austin’s extraordinary talent, and local research scientists based in Austin have produced 127 research publications presented at top AI conferences in recent years, demonstrating the city’s prowess and proficiency. By comparison, San Jose, which includes Silicon Valley, produced 224 publications over the same period. High performance computing usage at academic centers through the NSF ACCESS program recorded 16.0M credits, nearly 60% above those witnessed in San Jose.

Given its thriving tech sector, it isn’t surprising that Austin’s AI adoption metrics compare favorably with the two superstars of San Francisco and San Jose. While the number of AI-adept jobs posted in recent years in San Francisco still outpace Austin—San Francisco had 29,800 job postings requiring AI skills while Austin had 11,800. On firm data readiness and firm cloud readiness, Austin’s percentages exceed the two superstar AI centers and was on par with the share of jobs exposed to generative AI.

Public Sector and Business Applications:

In Austin, another AI asset is the Army Futures Command (AFC) Army AI Hub and the Army Artificial Intelligence Integration Center (AI2C), which promote innovation in AI and robotics, aiming to give soldiers a decisive advantage on the future battlefield by enabling human-machine teaming and streamlining data analysis for decision-making. This public sector application of AI adds to the richness and depth of Austin’s AI applications and expertise.

Outside of the public sector, Austin is home to leading AI firms including AI industrial tool developer SparkCognition, anomaly detection and predictive diagnostics firm LogicMonitor, LLM and Elon Musk founded company xAI, book and movie manuscript evaluator StoryFit, and Slingshot Aerospace which applies advanced analytics, machine learning, computer vision and collaborative tools to data from earth and space, providing customers with clarity in complex situations.

With 499 startups and 307 venture capital deals, Austin sets the pace in the heartland, while not quite reaching the heights of Silicon Valley. However, Austin has a highly active venture capital ecosystem, with many Austin-based VCs not focused solely on AI but investing in firms that use AI/ML as part of their product (enterprise software or hardware). Early-stage venture capital is more accessible from Austin VCs, but later stage rounds usually come from large national or cross-regional firms such as Sequoia or Accel. Next Coast Ventures, 7BC Venture Capital and Silverton are the leading Austin-based VC firms investing in the AI space. Austin startups raised close to $2.2 billion in VC funding in 2024 with AI among those sectors with the largest gains.

Austin is aided by a supportive policy environment and the ability to attract and retain top technical talent thanks to its livability and affordability compared to coastal hubs. This synergy of research, industry, capital and civic adoption gives Austin a balanced, resilient AI ecosystem that is already producing real deployments and is poised to shape national standards for responsible, scalable AI in the years ahead, likely enhancing Austin’s position as a hub.