Israel staged its first dedicated Physical AI conference in Tel Aviv on Sept. 8, 2026, signaling a government-led effort to move the country’s AI expertise beyond screens and software into robotics, autonomous systems and edge computing.
The event was organized by the National AI Headquarters under the Prime Minister’s Office in partnership with People & Computers and was presented primarily in Hebrew. It gathered government officials, defense and technology companies, investors and global tech firms to examine the intersection of AI models and physical applications.
Executives from Israeli robotics and autonomy companies including Innoviz, Beewise, Blue White Robotics, Pickommerce AI Robotics and LTX attended alongside Shield AI’s Israel-linked leadership and global technology companies such as NVIDIA, Intel, AMD, Deloitte and Microsoft. Speakers included Brig. Gen. (res.) Erez Eskel, head of the National Headquarters for Artificial Intelligence at the Prime Minister’s Office, and Lior Ben Horin, who leads NVIDIA’s Physical AI ecosystem work in EMEA. Guy Altagar, vice president of Physical AI at the Israeli National AI Directorate, and Dov Moran, inventor of the USB flash drive and managing partner at Grove Ventures, also addressed the conference.
A representative from the Prime Minister’s Office later confirmed that the conference served as the setting for Anduril Industries and Shield AI—two of the world’s largest defense‑tech companies with a combined value of almost $74 billion—to discuss strategy and potential collaborations.
Physical AI and Israel’s defense edge
Organizers framed the conference as an exploration of the bridge between AI models and robotic and autonomous applications. The concept of Physical AI, as presented at the event, emphasizes machines that perceive the world, make decisions and act within it—examples include autonomous vehicles, warehouse robots, agricultural machines and drones operating in environments with limited human intervention.
Speakers contrasted Physical AI with generative AI, noting that generative systems mainly produce information while Physical AI operates at the edge. Edge AI enables local decision‑making, reducing latency and allowing systems to function when connectivity to centralized computing is limited.
The linkage to Israel’s defense sector was explicit: drones, autonomous systems, sensors, computer vision and edge computing have been developed and deployed in defense contexts for years. The report that Oct. 7 and the subsequent war accelerated demand for systems that can operate with less reliance on human operators, communications links or centralized computing framed the urgency behind the push.
The government’s recently approved National AI Strategy explicitly identifies “connecting software to the physical world” as an area where Israel seeks global leadership, building on defense industry capabilities.
Building infrastructure: a national testing ground and partnerships
The strategy is already moving toward implementation. In August the Directorate published a Request for Information (RFI) to explore building a National Physical AI Testing Ground: a facility intended to let companies and researchers simulate complex real‑world environments—from highways and hospitals to manufacturing plants and farms—to accelerate breakthroughs in robotics, edge computing and sensing technology. Altagar said the RFI has drawn more than 250 applicants, ranging from large international corporations to small startups.
“We invite a lot of different companies from a lot of different verticals, different fields of expertise, to participate and help us build this ‘kibbutz,’ this Israeli ecosystem,” Altagar said. “We are very excited to … achieve the goals that Israel’s prime minister has developed for the national agenda: to start talking about AI not just as an application, [but] rather changing the way we live.” Hila Khalil, the Directorate’s vice president of strategy, called the conference the “kickoff” for that Physical AI plan, with plans to form sector‑specific communities and dedicated R&D centers.
Money and scale: investor concerns over hardware
The conference also examined the funding challenge for Physical AI. Hardware and deep‑tech require more capital, longer development cycles and manufacturing capacity than the software startups that have traditionally defined Israel’s venture model. That tension was the focus of an investor panel titled “Physical AI Needs Money: How Do You Deal With the Fear of It?,” moderated by Dr. Assaf Horowitz, vice president of AI at the Israel Innovation Authority, with panelists from Robotics Factory, Greensoil Investments, 10D and E44 Ventures.
Ezra Gardner, CIO and co‑founder of Varana Capital and CEO of Gesher Acquisitions Co., told attendees that public markets are dominated by hardware companies and questioned why hardware is less prominent in early‑stage VC in Israel. “All of the biggest companies in the public markets are actually hardware companies,” Gardner said, pointing to Amazon, Apple and Microsoft. “You ask yourself: Why is hardware not such a big VC thing, especially in Israel, but such a big thing in the public markets?”
Gardner advised founders to stop pitching revenue they don’t have and to instead present other proof points. He argued that Physical AI is effectively the continuation of hardware and deep tech solving long‑standing sensing and tactile problems; he predicted the label “Physical AI” will eventually give way to the simpler term “robotics.” “People are not going to need to say ‘Physical AI’ because robots are going to be everywhere,” he said. “It’s going to be obvious that it’s robotics, and they’re not going to say ‘AI’ because there isn’t going to be a dumb robot. They’re all going to be smart.”
Existing strengths and market context
Israel already hosts many of the technologies underpinning Physical AI, from computer vision and sensors to autonomous vehicles, agricultural robotics and drones. The Israel Innovation Authority counts more than 2,000 AI companies operating in the country, including 538 classified as deep‑tech AI and roughly 95 specifically in robotics. In 2025, core AI companies captured 35% of all Israeli tech investment as part of a $14.6 billion year—representing a 30% jump over 2024.
The conference represented a coordinated attempt to identify where Israel can build advantage in the next phase of the AI race—shifting from software‑centric strengths toward robotics, edge computing and physical systems—and to align policy, infrastructure and industry to support that transition.
