The boom in the application and use of Artificial intelligence (AI) over the past few years has been staggering. AI chatbots and image generators like ChatGPT and Stable Diffusion have brought Generative AI technology from the backrooms of large tech companies, into the hands of the general public.
And with the global rise in AI, we’ve seen a new economy emerge. From established tech giants to budding new startups, we’re seeing more investment in AI enterprises and rapid growth across the sector closer to home.
The UK AI sector
In the UK currently there are over 3,000 AI companies, with an estimated 129,000  employees working across a broad range of practices and applications, from machine learning and data analysis to signal processing and automation. The companies in this sector range from purpose-built AI companies, to those applying AI to their existing business.
Our Artificial Intelligence Real-Time Industrial Classification (RTIC) – a comprehensive, real-time mapping of the AI sector – shows a rising industry in the UK, with AI companies growing at an estimated +8.8% per year , contributing over £42bn to the UK economy.
And the AI sector has the potential to grow further still. Start-ups account for nearly 80% of all AI companies in UK currently, with the number of companies more than doubling in the past ten years. But just who are the companies currently pioneering AI in the UK and where do they call home?
In this article, we’ve used our real-time platform data for the UK’s entire business base of over 5.3 million companies to highlight the UK’s top AI hotspots. This top five ranking – based on company count per UK city  – highlights key regional AI strengths, company growth and investment, as well as the standout AI companies and innovative startups from across the UK.
Top five AI hotspots
Companies: 1,387 / Employees: 50,441
It comes as no surprise that the number one hotspot for AI in UK is in the capital. Housing 45% of all the UK’s AI companies, London is home to over 1,380 startups  and businesses, resulting in a total turnover of £17bn and an estimated company growth of +8%.
London is a hotbed for AI, with specialisms in machine learning, data analysis and enabling platforms that share a close connection with the city’s advanced manufacturing and energy management industries. Zooming in, there’s a high concentration of AI companies that operate in the heart of the city in Camden, City of London and Westminster, with over 1,226 startups working across the city as a whole.
When it comes to investment, AI companies in London have received a total of £8bn in investment funding over time, and saw the highest total investment in 2021, with £2.3bn recorded by Dealroom and 89 funding rounds held for the year.
Established big names such as Google DeepMind, a global player in Artificial Intelligence research, have offices in London, with an acquisition in 2014 allowing them to grow rapidly over the past few years, resulting in a current estimated turnover of £3.2bn and an estimate turnover growth of +134% per year.
London’s startup ecosystem is also thriving. causaLens, a London-based company have developed a platform to help support business decisions and drive ROI, have seen constant growth since 2018, with a series of investments (including Series A and Angel investments) and additional funding grants totaling at over £94 million, allowing them to grow their team and operations. We estimate an annual company growth of +227%.
Companies: 171 / Employees: 27,419
Ranked in second in our UK AI hotspots list, the town of Reading in Berkshire sits just 40 miles outside of the capital and boasts over 171 companies and startups working in the AI sector.
Perhaps not your first guess for an AI hotspot, the Reading area is home to a wide range of businesses that specialise in the building of AI applications and AI data processing. Our data shows a wider spread of AI companies in Reading, with concentrations across a range of local authorities including Reading city centre, West Berkshire and Surrey Heath.
Whilst London tops our rankings in terms of company count, Reading has seen big investment in AI in recent years. Global AI companies like cloud experts Dynatrace and Cloud Factory, who provide AI-lead data-labeling and human-in-the-loop solutions, both who have seen significant funding, run their UK operations out offices in the Reading area. A number of household names working in the AI space also have key locations in Reading, with key offices for tech giants Nvidia and Siemens based in the area.
Companies: 96 / Employees: 13,274
A research and academic hub, Cambridge has established itself as a key player in the UK AI market, with a high company growth rate of 15% per year and a high percentage of innovative startups in the area.
Out of our entire top five, Cambridge boasts the highest ratio of startups, with 89% of all its AI companies classified as a seed, start-up or scale-up growth stage within our platform. Cambridge has also seen over £46 million in total Innovate UK Grant Funding over time, with companies Arm, Myrtle and Congenica all seeing significant funding in the last 3 years.
As well as specialising in machine learning like many of the AI companies in the UK, Cambridge also has a high proportion of companies supporting innovation and research in the field of life sciences. AI Vivo are one just company, with their headquarters at Cambridge Science Park. They have developed a pioneering organ level drug discovery platform called Organome, that captures the dynamic effects of diseases and treatment at organ level for the first time. All developed with the help of an AI-driven predication engine.
Cambridge’s AI sector has a total turnover of £2.7bn and is growing fast with an growth rate of 15.1% per year.
Companies: 86 / Employees: 3,986
Manchester comes in at fourth in our list of AI company hotspots in the UK and for good reason. Whilst the northern city houses only 86 AI companies compared to London’s 1,300+, Manchester is notable for having the highest amount of total Innovate UK grant funding and largest annual growth rate of AI companies among the top five.
Manchester’s thriving AI sector contributes a total of over £183 million in turnover and an estimated company growth rate of 25% per year, with high-growth companies such as energy software experts Q Energy and game-changing AI platform Peak receiving significant investment and funding in the past three years.
Peak AI, who have their global headquarters in Manchester, have made a name for themselves with their AI-driven platform designed to help streamline inventory management, product performance and purchasing. With over £260 million in total funding, and an early VC round in August 2021 worth £53.8 million, Peak AI are seeing serious growth and show no signs of slowing down, especially with clients such as Nike, KFC and AO.com.
5. Milton Keynes
Companies: 70 / Employees: 1,155
As a key contributor to the national economy, Milton Keynes is no stranger to emerging sectors and industries. Making the top five of the UK’s AI hotspots, Milton Keynes is home to 70 AI companies and startups, contributing over £249 million in total turnover and supporting over 1,155 employees.
When it comes to AI, the city specialises in machine learning, data analysis, industry 4.0 and automation. Velocity are a scale-up based in Milton Keynes with expertise in IT and AI automation. They help clients such as the NHS and Britannia analyse larger datasets, deliver more accurate results and guide better decision-making.
Whilst Milton Keynes has a lower company growth rate when compared to the rest of the top AI hotspots the city boasts a number of high-growth startups and businesses, ranging from global signal processing experts like 8×8 to robotics and automation specialists like Rar UK Automation, who are headquartered in Shefford.
Interested in what’s next for the UK’s Artificial Intelligence sector or want to see our platform? Simply get in touch or book a demo today. Want to see more AI trends and insights? Head to our Artificial Intelligence RTIC page to find out more.
About our data
This top five ranking of the UK’s AI hotspots is based on our platform database of over 5.3 million companies, using our Artificial Intelligence Real-Time Industrial Classification (RTIC) built in collaboration with Innovate UK KTN. Key investment data is provided by Dealroom with skills and job information collected from Lightcast. For more about our growth measures and estimates, you can read more at https://thedatacity.com/insight/focusing-on-company-growth/.
Data and analysis was collected and conducted in May 2023.
 We collect our employee and skills data from Lightcast and use measured statistics wherever we can. When a company does not declare their employee count for the year, we estimate the number of employees where we can, to get a more accurate picture of how the sector is performing.
 To calculate the growth rate for a group of companies (or sector) we use the growth in employment across these companies.
 Top hotspots have been determined based on company count per city, using the OECD definition of cities as used in The Data City platform.
 Startups include all companies within The Data City platform with a growth stage of either Seed, Startup and Scale-up. Other established growth stages include Large Scale-up, Established Company and Unicorn.