Artificial intelligence continues to dominate headlines and public discourse, with much of the focus on large language models and the behemoths bringing them to life.
But in an age of AI revolution, there’s more to the conversation than chatbots. In almost every sector and industry, applications of this technology are becoming mainstream. Outside of the headlines, more tools are created every day.
Arguably the deepest impacts on business will be driven by purpose-built, sector-specific AI; in the practical use cases that bring new efficiencies and capabilities into reality.
AI tech is helping farmers increase yields and profitability, allowing doctors to diagnose with more accuracy, enabling more efficient use of infrastructure, and supporting sovereign AI and data capabilities.
This is where Australia is finding its niche in the global AI race.
A full-stack ecosystem built for AI innovation
Australia is home to a well-established tech, startup and funding ecosystem that is only growing – and AI is playing a central role in that growth.
In 2025, Australian startups raised a total of A$5.4 billion, up more than 30% on the previous year. Of that funding, more than 60% went to companies using AI in their operations in some way.
The Australian Government has committed A$7 billion to boosting AI infrastructure, as part of the National AI Plan, a move Australia’s Treasurer Jim Chalmers called ‘a terrific outcome for our economy and thriving tech sector’.
In a statement, Chalmers said: ‘It's more proof Australia has the talent, clean energy potential, trade partnerships, and policy settings needed to be one of the big winners when it comes to AI.’
‘Australia has all the elements that international investors innovating in AI are looking for – talent, well-calibrated policy, a deep research ecosystem, and strong adoption of AI across industries,’ says Andrew Barnes, Critical Technologies Lead at Austrade.
A regional centre for innovation and talent
Australia is known as a regional hub for software development, thanks to a deeply connected commercial and research ecosystem, and a rich pool of talent.
There are more than 1,500 AI companies in Australia, with more than 100 founded in the 2023–24 financial year alone. And they’re growing fast.
For example, Australian-headquartered global design platform Canva has become one of the world’s most used generative AI tools – ranking third globally by unique monthly users behind only ChatGPT and Gemini. Its sophisticated image and video generation tools were also developed in Australia, by Sydney-based Leonardo.ai.
Tech talent is also thriving. There are currently about 77,000 software engineers specialising in AI and machine learning in Australia. That number is only growing, with 160,000 enrolments in tertiary education for technology every year. In 2025, about 1,790 graduates specialised in AI, up 35% compared to 2023.
The commercial ecosystem is supported by more than 160 research institutes and 8 AI-specific research clusters. Six Australian universities rank in the top 100, globally, for AI research. These institutions are collaborative and supportive, working together to generate results.
One example of this collaboration is an AI tool that can identify women at high risk of developing breast cancer, having been trained with data from half a million mammograms. The algorithm detects differences in tissue that the human eye cannot, and allows for more efficient and earlier screening, reaching more women.
The tool was developed through collaboration between St Vincent’s Hospital Melbourne, St Vincent's Institute of Medical Research, BreastScreen Australia, The University of Adelaide and The University of Melbourne. Researchers received about A$5 million in funding from the Australian Government’s Medical Research Future Fund.
Australia’s tech sector is also attracting overseas tech founders looking for growth opportunities. Agricultural startup Polybee, for example, was founded in Singapore, but conducted much of its early R&D in Australia, and has grown through partnerships with customers here.
Polybee founder Siddharth Jadhav said the culture of collaboration and innovation in Australia makes it ‘one of the best places to start’.
‘As a startup, you’re looking to make an early impact — to get to a stage where you have the right partners and product. Working with such people matters more than you think.’
Polybee is far from alone in its collaborative partnerships in Australia.
India’s Dhruva Space partnered with Arula Tech and Esper Satellite Imagery to launch its first commercial satellite; Swedish firm Scania is working with mining giant Fortescue to develop autonomous road trains for the mining sector; and US AI infrastructure company Amigo is working with Aussie startup Eucalyptus to integrate AI agents into its healthcare apps.
From Australia to the world
One of the factors drawing AI innovators to Australia is its diverse industry base. Western Australia, for example, is a global hub of energy and resources innovation, while Adelaide is a hub for space tech and cyber security. Sydney remains a key location for finance and software development as well as research; and Melbourne is a leader in education, medical innovation and biotech.
‘In Australia, entrepreneurs can work with mature, globally relevant industries,’ says Barnes. ‘New AI-driven solutions for industry are being developed in Australia, to solve problems for customers here and then scale to the global market.’
Another Australian unicorn, Neara, builds ‘digital twins’ of power grids, and uses AI to predict outcomes from various scenarios, such as extreme weather events. Founded in Sydney, the startup works with almost 90% of all network utilities in Australia, as well as serving networks in the US, the UK and Europe.
Infrastructure-as-a-service provider Sharon AI recently listed on the Nasdaq stock exchange, and is working with Cisco and Nvidia to bring secure AI computing infrastructure to Australia.
And Harrison.ai, which supports analysis of medical imaging for more accurate diagnosis, is used by about 50% of Australian radiologists, and has a presence in more than 40 countries.
Evolving AI infrastructure in Australia
Australia’s data centre infrastructure is proven and evolving. Australia currently has 270 data centres, largely concentrated around Sydney (91) and Melbourne (51).
Global giants are investing here, with Amazon announcing a A$20 billion investment into Australian infrastructure over 4 years. Microsoft has committed A$5 billion to expand cloud and AI infrastructure, and has opened a multimillion-dollar ‘innovation hub’ in Sydney. In December, OpenAI announced its OpenAI for Australia program; including entrepreneur and upskilling programs, innovation partnerships with Australian companies, and a A$7 billion AI factory.
These international partnerships help build sovereign AI capabilities and empower local AI companies to build locally. They also highlight the transformation in Australia’s data centres towards greener AI infrastructure.
US-based SambaNova, for example, has partnered with Australian AI infrastructure provider SouthernCross AI (SCX) to develop local AI cloud infrastructure, deploying energy-efficient and faster chip technology across existing facilities. One of SCX and SambaNova’s first ‘AI factories’ is expected to be entirely powered by renewables.
Rigorous but tech-friendly policy
The Australian Government is taking a balanced approach to AI regulation, affirming the importance of safety, privacy and intellectual property. The Government is also an active contributor to the development of global AI safety standards. This positions AI developed in Australia for global acceptance.
The Australian policy approach also creates space for innovation and experimentation, and affirms the value of AI adoption across the economy.
The National AI Plan outlines a strategy for investing in AI, designed to maximise the benefits and minimise risk. This includes A$362 million in targeted grant funding, A$47 million for a Next Generation Graduates Program, and A$39.9 million to strengthen the AI ecosystem, including bolstering the National AI Centre. In the next phase of the Plan, the Government is shaping a clear framework for AI data centres with the release of Expectations of data centres and AI infrastructure developers – designed to make it easier to invest in Australia.
Elsewhere, the National Reconstruction Fund has pledged A$15 billion for investments to ‘diversify and transform’ Australian industry, including A$1 billion allocated to enabling capabilities such as AI. Meanwhile, the AI Safety Institute is intended to provide a space for testing, monitoring and sharing information.
The tech sector is also supported by the R&D Tax Incentive, a government scheme offering a refundable tax offset for eligible R&D spending. Between 2022 and 2024, this scheme supported A$950 million in R&D activities associated with AI – a figure expected to increase following implementation of the National AI Plan.
How Austrade can help
The Australian Trade and Investment Commission (Austrade) supports foreign investors to establish and expand operations in Australia. Our experts in Australia and around the world can help you through every stage of your investment journey.
We offer the latest industry insights, connections with key stakeholders and decision-makers, and virtual or physical site visits to Australia. Thousands of foreign businesses have worked with us to tap into the Australian market.
For information on investment opportunities in Australia, contact an Austrade investment specialist.
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