All that speed comes at a cost. AI data centers around the world can now draw 29.6 gigawatts of power, enough to run the entire state of New York at peak demand. Annual water use from running OpenAI’s GPT-4o alone may exceed the drinking water needs of 1.2 million people. At the same time, the supply chain for chips is alarmingly fragile. The US hosts most of the world’s AI data centers, and one company in Taiwan, TSMC, fabricates almost every leading AI chip.

The data reveals a technology evolving faster than we can manage. Here’s a look at some of the key points from this year’s report.

In a long, heated race with immense geopolitical stakes, the US and China are almost neck and neck on AI model performance, according to Arena, a community-driven ranking platform that allows users to compare the outputs of large language models on identical prompts. In early 2023, OpenAI had a lead with ChatGPT, but this gap narrowed in 2024 as Google and Anthropic released their own models. In February 2025, R1, an AI model built by the Chinese lab DeepSeek, briefly matched the top US model, ChatGPT. As of March 2026, Anthropic leads, trailed closely by xAI, Google, and OpenAI. Chinese models like DeepSeek and Alibaba lag only modestly. With the best AI models separated in the rankings by razor-thin margins, they’re now competing on cost, reliability, and real-world usefulness.

The index notes that the US and China have different AI advantages. While the US has more powerful AI models, more capital, and an estimated 5,427 data centers (more than 10 times as many as any other country), China leads in AI research publications, patents, and robotics.