Key Takeaways:

As artificial intelligence barrels into 2026, the story is less about a single breakthrough and more about a correction and convergence. After several years of exuberant investment, the AI market is expected to go through a pop similar to the early-2000s dot-com reset, as venture-backed startups that lack sustainable business models face pressure while stronger firms consolidate and mature the space. At the same time, the race to build massive AI data centers may create pockets of overcapacity, with some regions stuck holding underused infrastructure and public frustration over land, water, and energy demands.

For public agencies and smaller institutions, a key shift will be economic. Training and running advanced models will require more compute, energy, and specialized talent, driving up licensing and operating costs. AI will move from “free experimentationˮ to line items that must be carefully budgeted, just as agentic AI systems that can autonomously complete tasks begin to reshape workflows, governance, and cyber risk. Meanwhile, voice-based assistants, customized AI personas, and emotionally attuned companions will become more common in citizen services and professional life, raising fresh questions about transparency, consent, manipulation, and digital emotional safety.

Robotics will spread into more sectors, from logistics and health care to public works, putting new pressure on policymakers to define procurement standards, liability rules, and workforce transition plans. Employment disruption will accelerate as organizations reorganize around AI-first processes, pushing schools and training programs to emphasize reasoning, digital literacy, and human-AI collaboration. Finally, AI-enabled browsers that summarize, navigate, and act on usersʼ behalf will quietly change how people interact with information online, making delegation the default and forcing new debates about accuracy, bias, and information control.

Taken together, these trends point to 2026 as a year when AI becomes more personal, more embedded, and more autonomous, while also becoming more expensive and more disruptive. Leaders in government, education, and industry will need to pair curiosity with caution, investing in governance, skills, and resilience to ensure that this next phase of AI growth strengthens institutions and communities rather than destabilizing them.

Rethinking how to optimize AI strategies, budgets, or workflows in 2026? Fractional Leader can help. We’re here to guide public agencies and mission-driven organizations through what’s coming next. Just reply to this email to get the conversation started

Washingtonʼs outgoing CTO Nicholas Stowe and WaTech UX leader Wendy Wickstrom break down how the state redesigned procurement to fuel innovation. They explain how flipping the RFP process, reusing existing governance structures, and inviting agencies in as partners helped Washington test new ideas faster, reduce risk, and build more connected digital services across government. Itʼs a useful playbook for any state or local leader trying to modernize without getting trapped in old purchasing rules.

This summit will show how agencies can modernize legacy systems, break down data silos, and architect applications that are ready for generative AI. Sessions will highlight strategies to secure sensitive data, improve mission-critical performance, and build more agile, cost-efficient digital services, with perspectives from federal labs, law enforcement, and industry leaders.

Hosted at the Scoop News Group Conference Center, this event brings together federal technology leaders to explore how automation, AI, and other emerging tools can help agencies do more with less. Sessions will focus on reducing redundancies, cutting costs, and accelerating outcomes while improving the speed and quality of public services.

This brief explains how agencies can rapidly convert standard fleet vehicles into fully functional mobile command centers using ruggedized networking gear, edge computing, and secure LTE/5G connectivity. It highlights how always-on connectivity and in-vehicle applications help teams coordinate better, access real-time data, and maintain mission continuity when fixed infrastructure is unavailable. Read→

Utah Chief Information Officer Alan Fuller says the state has to level up its approach to digital government, pushing on multiple fronts at once: a state-endorsed digital ID to give residents a secure, portable online identity; a customer experience initiative that uses cross-agency data to find and fix pain points; and a whole-of-state cybersecurity strategy that has already rolled out endpoint protection to tens of thousands of devices and blocked multiple major attacks. As AI, geopolitics, and tightening cyber grants raise the stakes, Fuller argues that Utah must keep modernizing core systems, expand training, and use AI defensively so state employees can work smarter while maintaining public trust.

Was this email forwarded to you? Subscribe here to get Fractional Leader delivered to your inbox every Tuesday & Thursday.