Foreign investment in Israel reaches a record 26 billion

Following last month’s already impressive performance – when the figures confirmed that Israel’s GDP had grown by 15.4 per cent year-on-year in the second quarter, well above even the most optimistic forecasts – further evidence has emerged of the country’s economic resilience, despite countless political difficulties, both at home and abroad. According to figures just published by the OECD, foreign direct investment (FDI) into Israel reached 26.2 billion dollars in 2025, up 78 per cent on the previous year. This result stands in stark contrast to that of the rest of the OECD area, where the average for the same indicator actually fell by 6 per cent: Israel’s performance thus ranks it eighth among member countries in terms of absolute inflows of foreign capital.

Yet, whilst it reaps this windfall, the “start-up nation” remains embroiled in its ongoing conflicts: the military one, with Iran, Lebanon and Syria, where tensions continue to flare up constantly; and the equally persistent one with Hamas in the Gaza Strip. This hardline stance, both geopolitically and in terms of security, which Jerusalem considers essential for its survival, is drawing increasingly harsh criticism from European Union countries and even from the US Congress – once a virtually unshakeable bastion of support for Israel. Just this week, a little over a month after the announcement of Andy Burnham as the new British Prime Minister, the Foreign Office adopted a much tougher stance on the West Bank and the settlements, going so far as to introduce a new package of sanctions. There is no shortage of tensions on the domestic front either, with political polarisation becoming increasingly pronounced in the run-up to the October elections. Yet, in the first quarter of 2026, FDI into Israel reached 14.1 billion dollars, the highest quarterly figure on record: if this pace continues, this year’s total could already exceed the levels seen in 2025.

It is, however, worth taking a closer look at these figures. Behind such impressive figures, growth is in fact underpinned by a single sector – the one for which Israel has become famous. The software and IT sector, driven by American capital, accounts for around 90 per cent of transactions on its own, followed at a considerable distance by the healthcare and life sciences sector, at 3.4 per cent. And if we delve even further into the details, 89 per cent of investment in Israeli hi-tech has gone into artificial intelligence: a boom that seems to be driven not so much by widespread growth in investment as by a handful of mega-deals. A comparison with 2021, the previous record year for FDI, suffices: back then there were 2,890 deals, whilst in 2025 – which nevertheless surpassed 2021 in terms of total capital volume – the number almost halved, standing at 1,575. The most high-profile remains Google’s acquisition of the Israeli cybersecurity firm Wiz, a deal which, according to estimates by the Ministry of Finance, single-handedly injected some $16.8 billion into the country’s economy. Similarly, the acquisition of CyberArk, another cyber security firm, by Palo Alto Networks for $25 billion brought a still-considerable contribution of $2.5 billion. Nevertheless, the fact remains that the overall figures are unprecedented and that, despite the real risks in terms of security and international public opinion, the Israeli economic ecosystem appears to retain a technological edge and, above all, the confidence of global investors.