America still leads AI investment. But China has nearly closed the performance gap. And the rest of the world is catching up faster than anyone expected.

For years the US-China AI race looked like a blowout. Not anymore. Stanford’s annual AI Index for 2026 finds that generative AI has now reached 53% global population adoption, faster than the internet ever did, but the more striking finding is competitive. China has nearly erased America’s lead, trading the top ranking in AI model performance multiple times over the past year. The UAE and Singapore are punching well above their economic weight in AI adoption. And there is a troubling side effect closer to home: employment for software developers aged 22 to 25 is down nearly 20% since 2022, with AI playing a growing role. The index also flags that top AI models now answer over 50% of questions on Humanity’s Last Exam, the hardest benchmark ever designed. A year ago the best model scored 8.8%. The pace of change is accelerating faster than policy, education or the job market can keep up with.

Sources: Stanford HAI, IEEE Spectrum, Arab News PK