1. “Pop” Goes the AI Bubble
After several years of frenetic investment and breathless expectations, signs point to a necessary correction in the AI marketplace. Venture-backed startups that promised transformative capabilities without sustainable business models will feel the pressure first. This “pop” will not signal the end of AI — far from it. Instead, the market will mature as weaker players fold, stronger innovators expand, and investors prioritize practical value over hype. The shakeout will mirror the early 2000s Internet correction, creating a more stable foundation for long-term growth.
2. A Possible Data Center Glut
The race to build massive data centers has accelerated at unprecedented speed. Driven by large language model development, cloud expansion and national-level competitiveness, construction has outpaced even optimistic demand models. As efficiency improves and organizations shift from training to inference, pockets of overcapacity may emerge. Some regions may face underutilized facilities, wasted infrastructure investment, and public frustration over land, water and energy usage. During the dramatic growth spurt in cellular technologies, each carrier began building its own towers until it made more sense to co-locate them. Might this apply to data centers, too? The lesson for 2026: capacity planning must become smarter, more sustainable and more collaborative across the public and private sectors.
3. AI Prices and Operating Costs Will Rise
Contrary to the narrative that technology always becomes cheaper, AI is entering a period in which prices are likely to rise. Training advanced models requires enormous computing power, significant energy costs and specialized expertise. Licensing fees for proprietary models are rising, and even open-source frameworks demand powerful hardware. For local governments, small businesses, nonprofits and universities, the shift from “free experimentation” to “budgeted deployment” will be significant. Financial planning will increasingly need to account for AI subscriptions, infrastructure and long-term maintenance.
4. Agentic AI Takes Hold
If generative AI reshaped how we create content, agentic AI will reshape how work gets done. These systems move from answering questions to acting on our behalf — booking meetings, drafting responses, generating reports, monitoring systems and completing multistep tasks. By 2026, many enterprise platforms will offer built-in AI agents capable of operating autonomously within defined boundaries. The benefits are obvious: efficiency, consistency and productivity. But risks grow as well. Over-delegation, security vulnerabilities and alignment failures could occur if organizations fail to establish guardrails. Governance will shift from focusing on “use” to managing “autonomous behavior.”
5. The Power of Voice AI Grows
Voice is emerging as the next dominant interface. Improvements in accuracy, emotional nuance and real-time responsiveness are making voice AI feel more natural than ever. In 2026, voice-based assistants will become integral to public services, customer interactions, accessibility tools and professional workflows. Older adults — traditionally slower adopters of new technologies — are increasingly embracing voice AI because it reduces friction in daily activities. This expansion will push developers to design more inclusive voice systems and encourage governments to incorporate voice into citizen service strategies.
6. AI Takes on Customized Personas
The next wave of AI systems will not feel generic. Personas — tailored identities with consistent tone, expertise and behavioral traits — will become standard features across platforms. As a case in point, OpenAI announced the addition of several personality presets for ChatGPT, bringing the total to eight. Organizations will deploy branded personas for training, onboarding, communication and service delivery. Individuals will create personal advisers with names, memories and recognizable styles. While this personalization enhances engagement and utility, it also raises ethical concerns: How persuasive should a persona be? Should the public be notified when a persona is AI-generated? Policymakers will need new definitions of transparency and consent.
7. AI Companionship and Mentorship Become the Norm
Beyond personas lies a more profound transformation: AI as an emotional companion or mentor. From academic coaching to elder support to workforce development, AI-driven companionship tools are proliferating rapidly. These systems offer encouragement, accountability, personalized feedback and simulated social interaction. While they can reduce loneliness, improve mental well-being, and expand access to learning, they also carry risks of dependency, manipulation and disinformation. Expect calls for “digital emotional safety standards” as society grapples with the psychological implications of AI companionship. Professionally, expect to see AI mentors and companions tailor-made for CIOs.
8. Robotics and AI Expand in All Sectors
AI’s growing sophistication is accelerating robotics adoption across logistics, manufacturing, agriculture, health care, hospitality and public works. Cheaper sensors, better mobility and enhanced multimodal cognition make robots significantly more capable than just a few years ago. In 2026, more communities will encounter robotic assistants on sidewalks, in hospitals, in warehouses and in government facilities. This trend brings significant policy considerations: procurement standards, public safety guidelines, workforce training, liability rules and citizen acceptance. The fusion of robotics and AI will be one of the most visible technological shifts of the coming year.
9. Employment Displacement Accelerates
AI is reshaping the workforce at a pace that outstrips earlier automation cycles. While new jobs will emerge, many administrative, analytical and creative roles will be restructured or eliminated. Organizations will reorganize around AI-first workflows, and workers will need new skills to remain competitive. Governments, in particular, will face pressure to modernize job classifications, invest in retraining and support displaced workers. Education systems must pivot from memorization-based models to curricula emphasizing reasoning, digital literacy and human-AI collaboration.
10. AI Browsers Take Hold
AI-enabled browsers represent one of the most transformative — and underrated — shifts of 2026. These browsers can summarize pages, draft communication, navigate websites autonomously and even complete tasks such as booking travel or comparing products. Instead of searching, users will increasingly delegate. This redefines digital literacy and changes how citizens interact with information. While productivity will soar, AI browsers also introduce new concerns about accuracy, bias, advertising and information control. Regulation and standards will inevitably follow.
Conclusion
2026 will not be defined by a single breakthrough but by a complex mix of evolution, correction and convergence. AI will become more powerful, more personal and more embedded in daily life — while also becoming more expensive, more autonomous and more disruptive. Leaders in government, academia, and industry must prepare now for the opportunities and challenges ahead. By approaching AI with curiosity, caution and purpose, we can ensure that the transformations of 2026 lead to more resilient institutions, more empowered communities and a more thoughtful digital future.
Alan R. Shark, a senior fellow at the Center for Digital Government, is an associate professor at the Schar School for Policy and Government at George Mason University, where he also serves as a faculty member in the Center for Human AI Innovation in Society. He is also a senior fellow and former executive director of the Public Technology Institute, a fellow of the National Academy of Public Administration and founder and co-chair of its Standing Panel on Technology Leadership. He is the host of the podcast series SharkBytes.Net. The Center for Digital Government and Government Technology are both divisions of e.Republic.
