Despite the often-negative discussion about testing in schools, assessments are a necessary and useful tool in the teaching and learning process. This is especially true when it comes to diagnostic and formative assessments, which give teachers real-time direction for what students need to learn to master course content. It is this space where the advancements of technology can particularly benefit teaching and learning, as there is growing recognition in the field of psychology that tests help students learn. Sometimes called the testing effect, this theory suggests that low-stakes quizzes help students gain knowledge--and improve instruction. Advancements in technology have led to new developments in the field, such as stealth assessments, that reduce some of the stress students may experience around assessments. This approach makes testing more ubiquitous and useful for teachers because the methods are woven into the fabric of learning and are invisible to students. But to get to a place where all teachers have access to such tests, there needs to be greater investment in testing research and development that results in better systems of diagnostic and formative assessments. This issue brief reviews developments in artificial intelligence (AI) and the types of advancements in diagnostic and formative testing it makes possible. This issue brief ends with recommendations for how the federal government can invest in testing research and development. This report is part two in a series about the future of testing in America's schools. Part one "Effective and Equitable Assessment Systems. Future of Testing in Education" (ED617053) presents a theory of action that assessments should play in schools. Part three "The Way Forward for State Standardized Tests. Future of Testing in Education" (ED617055) looks at assessment designs that can improve large-scale standardized tests.