The study by the Information Technology and Innovation Foundation assessed AI using 30 separate metrics including human talent, research activity, commercial development and investment in hardware and software.
To remain competitive, the report said, Europe needs to boost research tax incentives, and expand public research institutes working on AI.
For the United States to maintain its lead, it must boost support for AI research and deployment, and step up efforts to develop AI talent domestically while attracting top talent from around the world.