<p>This study investigates the impact of AI research capacity on research and innovation productivities in higher education institutions in the top 10 countries, by employing Prais-Winsten Corrected Standard Errors (PCSE), Panel Quantile Regression (PQR), and Two-Stage Least Squares (2SLS) models from 2017 to 2021. The findings revealed that an increase in AI research output (AIRO) is improving the institutions' research productivity, while AI patent grants (AIPG) have a negligible effect on it; but AI research impact (AIRI) and AI talent concentration (AITC) have no impact on it. Furthermore, increases in AIRO, AIRI, and AIPG improve the institutions' innovation productivity, but AITC does not. Moreover, AI investment (AII) has a negligible impact on AI jobs, skills and AI software development; yet, the AII promotes bachelor’s degree AI professionals but negligibly impacts that of associates, less than bachelor’s degree, and advanced degrees AI professionals. On the other side, AII has a synergetic effect on AIRO and AIPG in stimulating the institutions' research productivity, but it has no such effect on AIRI and AITC. But with respect to the institutions' research innovation productivity, the AII has such an effect on AIRO, AIRI, and AIPG, whereas such an effect is negligible on AITC.</p>