AI Applications for Smart Cities Market Report 2026

The artificial intelligence (AI) applications for smart cities market size has grown rapidly in recent years. It will grow from $15.78 billion in 2025 to $18.88 billion in 2026 at a compound annual growth rate (CAGR) of 19.6%. The growth in the historic period can be attributed to increasing urbanization, growing demand for efficient city management, rising need for traffic optimization, expansion of public safety initiatives, and increasing adoption of IoT infrastructure.

The artificial intelligence (AI) applications for smart cities market size is expected to see rapid growth in the next few years. It will grow to $38.35 billion in 2030 at a compound annual growth rate (CAGR) of 19.4%. The growth in the forecast period can be attributed to growing investment in smart city projects, rising government funding for AI deployment, increasing integration of AI with city services, expansion of cloud and edge computing in urban applications, and growing awareness about sustainable urban development. Major trends in the forecast period include technology advancements in AI algorithms, innovations in real-time data analytics, developments in autonomous traffic management, research and developments in predictive maintenance, and integration of AI with IoT and sensor networks.

The growing adoption of smart-city initiatives is expected to drive the growth of the artificial intelligence (AI) applications for smart cities market in the coming years. Smart-city initiatives involve urban development strategies that leverage digital technologies and data analytics to optimize city operations and promote economic growth. Adoption of these initiatives is increasing as municipalities implement intelligent transportation systems to reduce traffic congestion and enhance mobility for citizens. AI applications for smart cities are positioned to benefit from this trend by providing intelligent algorithms to efficiently manage traffic, energy grids, and waste systems. For example, in October 2025, the European Commission, a Belgium-based executive body of the European Union, reported that 10 cities received the EU Mission Label in October 2023, which increased to 23 cities in March 2024, 20 more in October 2024, and 39 additional cities in May 2025, bringing the total number of labeled climate-neutral and smart cities to 103 out of 112 participating cities. Thus, the rising adoption of smart-city initiatives is fueling the growth of the AI applications for smart cities market.

Major companies operating in the artificial intelligence (AI) applications for smart cities market are focusing on technological innovations, such as AI-powered location intelligence platforms, to provide real-time, location-based insights that enhance urban planning and enable more responsive, data-driven public services across smart city ecosystems. An AI-powered location intelligence platform is an AI-driven system that analyzes real-time geospatial data to help cities optimize mobility, resource allocation, and public service delivery. For example, in August 2024, Nearmap Pty Ltd., an Australia-based provider of location intelligence and aerial imagery, launched Generation 6 (Gen 6), a significant upgrade to its location intelligence platform featuring over 130 AI-derived detections and scores across high-resolution aerial imagery in Australia, the US, Canada, and New Zealand. The platform offers more than 130 AI-derived data layers, including new detections for solar panels, construction sites, and detailed road markings, trained on millions of images to deliver insights supporting applications such as pavement management, urban planning, and vegetation monitoring for smart cities, with data provided as vector files for seamless integration into GIS platforms.

In November 2024, Almaviva, an Italy-based digital innovation group specializing in information and communications technology for the transportation and logistics sectors, acquired Iteris Inc. for an undisclosed sum. Through this acquisition, Almaviva aimed to expand its smart mobility portfolio and strengthen its presence in the North American intelligent transportation market by integrating advanced ClearMobility platform capabilities and leveraging Iteris’s extensive network of public agency clients. Iteris Inc. is a US-based provider of smart mobility infrastructure management solutions, cloud-enabled software, and AI applications for smart cities.

Major companies operating in the artificial intelligence (AI) applications for smart cities market are Hitachi Ltd., International Business Machines Corporation, Cisco Systems Inc., Schneider Electric SE, ABB Ltd., Tata Consultancy Services Limited, Larsen & Toubro Limited, Infosys Limited, HCL Technologies Limited, PTC Inc., Verkada Inc., Optibus Ltd., Huawei Technologies Co. Ltd, Ubicquia Inc., Gorilla Technology Group Inc., Utilidata Inc., Ekin Smart City Technologies Inc., Ecube Labs Co. Ltd., Nodeflux Inc., Enevo Oy, Seoul Robotics Inc.

North America was the largest region in the artificial intelligence (AI) applications for smart cities market in 2025. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the artificial intelligence (AI) applications for smart cities market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the artificial intelligence (AI) applications for smart cities market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report’s Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

Tariffs have influenced the artificial intelligence applications for smart cities market by increasing the cost of imported smart devices such as sensors, drones, intelligent streetlights, and communication hardware. Infrastructure intensive segments like mobility systems, surveillance, and energy management are most affected, particularly in developing smart city regions across asia pacific and latin america. These higher costs can delay large scale deployments. However, tariffs are also encouraging local manufacturing, public private partnerships, and greater emphasis on software centric and cloud based ai solutions, supporting long term ecosystem development.

Artificial intelligence (AI) applications for smart cities refer to the use of AI technologies to improve urban infrastructure, services, and overall quality of life. These applications utilize data analytics, machine learning, and automation to optimize traffic management, energy usage, public safety, and other city operations. They help cities become more efficient, sustainable, and responsive to residents' needs.

The main types of artificial intelligence (AI) applications for smart cities include safety and security, mobility and transportation, energy and resource management, infrastructure management, and healthcare. Safety and security solutions refer to AI-driven systems designed to monitor urban environments, detect anomalies, predict and prevent incidents, and enhance public safety through real-time surveillance, threat detection, and optimized emergency response. Deployment modes include cloud-based and on-premises solutions. Key technologies comprise machine learning, computer vision, IoT integration, and big data analytics. These applications are implemented in large cities as well as medium and small cities.

The artificial intelligence (AI) applications for smart cities market consist of revenues earned by entities by providing services such as waste management solutions, smart healthcare services, environmental monitoring, and citizen engagement platforms. The market value includes the value of related goods sold by the service provider or included within the service offering. The artificial intelligence (AI) applications for smart cities market include sales of smart meters, drones, wearable health devices, intelligent streetlights, and robotic cleaning systems. Values in this market are ‘factory gate’ values, that is, the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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