Foreign investment in Israel reaches a record 26 billion

Foreign direct investment in Israel reached an all-time high of $26.2 billion in 2025, compared with $14.8 billion in 2024. The increase, as indicated in the official report, stands at 78 per cent, bringing the figure to approximately 14 per cent above the previous record of 22.9 billion, set in 2021. The data comes from a study published on 25 August 2026 by the Chief Economist’s Department of the Israeli Ministry of Finance, compiled using both OECD statistics and a ministerial database of individual transactions. This methodological distinction is essential: the investments measured by the OECD and the value of announced acquisitions or investments do not represent the same aggregate. Israel’s performance bucks the trend. In 2025, global foreign direct investment rose by 6 per cent, reaching $1,430 billion, whilst total inflows into OECD countries fell by 6 per cent. Israel ranked eighth amongst the organisation’s members in terms of the absolute value of FDI and third in relation to GDP. Yet, whilst reaping this windfall, the “start-up nation” remains embroiled in its ongoing conflicts: the military front, involving Iran, Lebanon and Syria, where tensions continue to flare up constantly; and the equally persistent conflict with Hamas in the Gaza Strip. This hard line – both geopolitically and in terms of security – is considered by Jerusalem to be essential for its survival, but it is drawing increasingly harsh criticism from European Union countries and even from the US Congress – once an almost unshakeable bastion of support for Israel. Just this week, a little over a month after the announcement that Andy Burnham had been appointed 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.

The start of 2026 was also exceptionally strong: in the first quarter, FDI reached $14.1 billion, the highest quarterly figure ever recorded in the country. However, this figure should not be automatically annualised, as direct investment flows can be distorted by the timing of a few one-off transactions. It is nevertheless worth examining these figures more closely. The record figure therefore reflects a high concentration in just a few transactions of exceptional size.

Behind such impressive figures, growth is in fact driven 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 look even more closely, 89 per cent of investment in Israeli hi-tech has flowed 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, injected some $16.8 billion into the country’s economy on its own. Similarly, the acquisition of CyberArk, another cybersecurity firm, by Palo Alto Networks for $25 billion brought a still-considerable contribution of $2.5 billion. The result therefore demonstrates the enduring ability of Israeli technologies to attract international buyers and capital. However, it does not prove uniform growth across the entire economy: above all, it highlights the global strength of software, cloud computing and cyber security, alongside a growing dependence on US investors and a limited number of large-scale deals.