Give the AI a memory. It doesn't remember where or why it loses ships so it just sends more to be lost. Goes for minefields, black holes, heavily defended warp points and so on. "Danger type X, don't go there unless have strength type A and/or B and/or C".
Also like I said in another thread (Compiled....), make the AI keep track of how many planets it can colonize in safe areas and stop building colony ships once there are no more safe areas or it needs one to establish a bridgehead, but it has to be safe to get in there to do it. ie, don't build colonyships and send them into enemy held territory to colonize planets it should bloddy well know it can't reach due to minefields, enemy fleets, whatever.
Also teach it proper warp point defense. A ****load of sats and mines backed up by heavily armed bases. Especially the neutrals should learn how to this. Fighterbases as well maybe if the race is heavy on using fighters.
Again memory. It should decide on a longterm goal (take system X for example) and keep swinging at you until it completes it or realises it can't and reevalutes it's options. Go on the defensive and build up to take system X maybe. As it behaves now it just seems to decide from turn to turn what to do which means that kickass fleet that just busted through my defenses just turns around and leaves although it could have gone a systemwide rampage virtually unopposed. Or parked on the next warppoint into my space while a smaller fleet invades all my planets, which brings up another point. Teach it to use troops! Even with mods to give it troop tech at game start and build them and their transports I have never seen the AI invade. It should invade more to get already developed planets and population that breathes other atmospheres and it should learn how to properly use that population.
And peace. Maybe a new treaty below trade agreement, not sure, but the AI needs to sue for peace if it feels it is necesary or it has achieved it's goal. Or cease fire. That would have to be a new treaty. Not sure how it would work though.
And as others have said, it is damn annoying to have your allies colonize in your backyard. I don't want that. They should request persmission first and if denied they should stay the hell away. And depending on demeanor and personality rejection/acceptance should anger it differently, but it shouldn't be too upset if you deny it. And if I tell them to beat it and they don't I should be able to drive them away by force, thus risking their anger of course. Reperations could be made of course, but maybe they won't accept it.
And make it use all excess resources. The AI wastes tonnes of resources each year because it can't store it. Build units instead.
Also fix whatever it is that makes the AI not build stuff for several turns sometimes.
And improve how it chooses how to use it's planets. Too often I see low% planets used to generate that resource and high% planets used for another resource (it doesn't have) or for research/intel. And maybe reevaluate down the line. At least when it comes to facilities later in the research tree. Whan I decide how to use a planet the values are the deciding factors. High in minerals it's a mining colony, high in organics it's a farming colony and so on. Low in all it's research or intel. Size matters too. Huge breathable with say high organic is a farming colony, but maybe not completely depending on how much organics I need. I know, hard to get the AI to do but it has to be possible to make it perform better than now.
Why is the AI so fond of only building the biggest baddest ships around? Once it can build a bigger ship it never builds a smaller one. Small ships have their uses too.
Balanced fleets. Works together with "why only big ships?". The AI needs to put together balanced fleets with at least two attack ship types (beam and missile or missile and boarder or beam and rammer and so on), carriers, troop transports, planetary bombers, fuelers and repairers and so on depending on the purpose. All out invasion bring everybody. Killing Spree forget the troops.
Needs to put Combat Sensors and ECM on all ships. I often see Dreadnoughts without them even though they have the tech for it and has had it in other ships. Makes them sitting ducks.
It should build more base space yards. I tweaked mine to build them at once and build more then in the shipping set and I get a better fight out of it since it can build more ships at the same time.
Personalize the AI's by giving each AI indiviual AI_Speech files based on personality and demeanor. Each race says the same thing all the time and that just doesn't make it very interesting to talk to them. Also make demand Messages clearer. Took me awhile to realise that "We warn you, the Eee will betray you" was a demand to break my treaty with the Eee.
I know there's more that has bugged me about the AI but I can't remember it all right now. Pretty much as it is anyway.
Non-AI issue I just had to mention:
Advanced storage technique should affect empire storage of resources and minimum empire storage should be multiplied by number of starting planets.