The accelerating pace of generative AI has opened the door to a more physical economic revolution, one that goes beyond digital chatbots improving worker productivity and opens the door to transformation in cities that harness its potential.

We recently wrote why Pittsburgh has the ingredients be an important part of this mix. Its strengths were on full display at the AI ​​Horizons summit earlier this month. Headlined by Pennsylvania Democratic Governor Josh Shapiro, a standing-room-only crowd of 700 attendees gave the event an atmosphere of near-religious fervor, with Carnegie Robotics’ autonomous dog playing fetch in the exhibit hall .

The highlight of the summit came when Nvidia announced Pittsburgh as its first “AI Tech Community City.” A signing ceremony involving Shapiro, Nvidia’s Anthony Robbins, Farnam Jahanian, president of Carnegie Mellon University, and Joan Gabel, chancellor of the University of Pittsburgh, marked the beginning of a groundbreaking partnership.

The summit showcased a rapidly growing network of companies using AI to solve difficult challenges in the physical world. This next stage of AI evolution, called physical AI, is where generative AI, robotics, and simulation converge. Think of your Roomba, but exponentially more capable: machines capable of performing complex real-world tasks, reprogramming themselves based on environmental changes in real time. Instead of robots performing pre-programmed tasks with static code, digital twin models allow robots to learn as they go, performing complex tasks in harsh environments, from monitoring bridge safety to fieldwork. accident victim to assistance during complex surgical procedures and, of course, autonomous driving. .

The partnership with Nvidia illustrates how Pittsburgh has quickly become a true innovation playground for physical AI and market leaders. Nvidia’s commitment will integrate solutions architects into the academic ecosystem, particularly in the field of robotics, while allowing startups and scaleups to benefit from its in-demand chips.

Nvidia is not alone in Pittsburgh. Another company, Gecko Robotics, is integrating AI and robotics to transform how the world builds, operates and maintains its most critical infrastructure. Its distinctive-looking robots go where humans can’t, inspecting complex defense, oil and gas, energy, steel and mining systems. SkildAI humanoids optimize IT infrastructure and streamline industrial processes, enabling businesses to reduce costs and increase efficiency through intelligent task automation. And Hellbender, a pioneer in AI-based computer vision systems, manufactures cutting-edge technologies for defense and industrial applications with a focus on secure, American-made solutions ensuring robust performance in environments high stakes. Twenty-nine percent of its employees performing AI-based manufacturing are military veterans.

As Pittsburgh is poised to become the leader in the new AI economy, with a projected compound annual growth rate of almost 40 percent from 2024 to 2030, its lack of venture capital threatens to limit the city’s ability to take full advantage of this historic opportunity. Without the influx of venture financing, other efforts such as creating strategic locations marked by infrastructure investments, creative policies and workforce development must be deployed quickly to ensure that businesses of Pittsburgh’s physical AI and their related tech and blue-collar jobs are not only taking root, but germinating. Unlike traditional technology, where workers primarily stare at computer screens, the new AI economy is multidimensional and requires deep thinking and unexplored collaborations with “place” at its center.

Innovation districts, compact but powerful hubs of creativity and invention, will remain the epicenters of progress. But they will be different and will include innovation teams from all sectors. Pittsburgh’s Bakery Square, along with the new AI Innovation Corridor along Penn Avenue, have already become a dynamic mix of advanced government units (including the Army’s Artificial Intelligence Integration Center), giant established tech companies (Google and Duolingo), promising startups (Lovelace AI, Strategy Robot, Hellbender), academic institutions (Carnegie Mellon University’s Tech Transfer Office) and investors (Magarac Venture Partners, UPMC Enterprises). This neighborhood combines repurposed manufacturing spaces with high-quality housing, retail and shared experiences.

But given domestic and global competition – with, for example, the Saudi government investing 40 billion dollars in AI — American cities, including Pittsburgh, need innovation footprints that are both dense and broader, enabling innovation and expansion close to academic talent and skilled workers.

Take Hellbender, for example. The company is moving to a former industrial site. As it expands its operations with the acquisition of co-robotic equipment, faster production and growing sales will lead to a workforce of 600 people to assemble AI-enabled products. In contrast, large industrial players such as major defense companies need larger swaths of land, which will likely be on a site known as Hazelwood Green, a former steelworks being revitalized that has the capacity to host AI factories.

Another critical geography of physical AI is in existing urban and suburban spaces where innovations come to life: schools, hospitals, universities, and government buildings. These locations will serve as testing grounds for AI deployment, sending crucial feedback to an interdisciplinary network of inventors, researchers, technologists, educators, doctors and policymakers. Through these real-world experiments, AI prototypes will be refined and scaled, driving widespread adoption of digital twins. These traditional education, finance, and healthcare organizations are also in an economic race: eager to harness the power of AI through talent recruitment, some are establishing AI hubs along the stretch of Penn Avenue, known as “AI Avenue”.

Another demand of physical AI is energy production. AI consumes a lot of energy. The International Energy Agency projects that by 2026, data centers alone could consume 1,000 terawatt hours of electricity, double the 2022 amount and comparable to Japan’s total energy consumption. As the market shifts from data centers to AI factories, energy demand will skyrocket, driven by the supercomputing needs of self-driving cars, autonomous machines, and industrial robots.

Here again, Pittsburgh offers a significant advantage. The region sits atop one of the world’s largest natural gas reserves, has access to abundant water supplies and has a skilled workforce. Vacant former steel mill sites in suburban counties, located along existing fiber optic internet lines, are poised for reinvention in forward-thinking initiatives by utilities, businesses and public entities that continue to advance the innovation agenda.

Physical AI will not only reshape our cities, but also require cities to become active designers and participants in this transformation. Ultimately, it is humans who will bridge the gap between digital intelligence and concrete action.

Bruce Katz is the founding director of the Nowak Metro Finance Lab at Drexel University. Joanna Doven advises on economic growth and positioning strategies for developers and institutions as CEO of Premo Consultants.

GoverningOpinion columns reflect the opinions of their authors and not necessarily those of GoverningThe editors or management of .