AI & Analytics in Military & Defense Market - By Offering, By Installation Type, By Technology, By Application, By Platform & Forecast, 2025 - 2034

AI & Analytics in Military & Defense Market Size

The global AI & analytics in military & defense market was valued at USD 10.4 billion in 2024 and is estimated to grow at a CAGR of 13.4% from 2025 to 2034.
 

Modern warfare's complexity and the need for real-time intelligence drive tactical unmanned aerial system (UAS) market growth, especially in advanced surveillance and reconnaissance. Defense forces are replacing older systems like the RQ-7B Shadow with more efficient and versatile UAS. Integration of AI, machine learning, and autonomous flight systems allows next-gen UAS to operate in contested environments, offering better endurance, autonomy, and integration with defense infrastructures. These advancements make UAS crucial for military operations, border patrol, and counterinsurgency missions.
 

For instance, in March 2023, the U.S. Army chose Northrop Grumman Corporation and Shield AI to compete in the Future Tactical Unmanned Aircraft System (FTUAS) Increment 2 program. This initiative seeks to replace the long-serving RQ-7B Shadow tactical unmanned aerial system (UAS).
 

Autonomous systems, including drones, unmanned ground vehicles (UGVs), and autonomous naval vessels, are becoming integral to military operations. AI-driven systems are expected to manage increasingly complex tasks, from surveillance to precision strikes, minimizing human exposure in high-risk environments. These systems can function independently or in swarms, offering tactical advantages in speed, endurance, and operational flexibility. The ongoing development of autonomous systems, powered by AI and machine learning, will be a key focus area, particularly for missions involving intelligence gathering, logistics, and battlefield support.
 

AI & Analytics in Military & Defense Market Trends

AI-driven training and simulation technologies in defense are experiencing significant growth due to demand for cost-effective and immersive solutions. Advanced virtual and mixed-reality environments enable realistic simulations for complex military scenarios without live exercises. AI personalizes training based on individual performance, while machine learning algorithms provide real-time feedback and adapt to evolving combat tactics. As defense budgets prioritize efficiency and readiness, these AI-powered systems are becoming essential for modernizing military training programs, offering comprehensive and tailored learning experience. For instance, in June 2024, a German consortium unveiled the initial AI infrastructure for the Future Combat Air System (FCAS) program, just nine months after receiving the contract from the German armament procurement agency. The consortium includes Helsing, IBM Deutschland, and Schonhofer Sales and Engineering, a subsidiary of Rohde & Schwarz.
 

AI & Analytics in Military & Defense Market Analysis

Based on offering, the market is segmented into hardware, software and services. The software segment is expected to register a CAGR of over 14% over the forecast period.
 

• AI and analytics software in military and defense enable advanced capabilities like predictive maintenance, real-time awareness, and decision support. A key trend is the use of AI-driven platforms that analyze data from various sources to provide useful insights. These platforms enhance defense operations such as intelligence gathering, threat detection, and cybersecurity by processing data in real-time and improving operational efficiency.
   
• Defense software trends include autonomous systems for unmanned vehicles, drones, and robots used in reconnaissance, surveillance, and logistics. These AI-driven systems adapt to changing battlefield conditions, improving effectiveness. Additionally, AI-powered simulation software is increasingly used for military training, enhancing personnel readiness.

Based on application, the market is divided into warfare platforms/weaponry, cybersecurity, logistics & transportation, surveillance & situational awareness, command & control, battlefield healthcare, simulation & training, threat detection, information processing, and others. The information processing segment dominated the global market with a revenue of USD 2.2 billion in 2024.
 

• Edge computing is transforming data processing in the AI and Analytics for Military and Defense market. This approach moves data analysis closer to the source, such as sensors and unmanned vehicles, instead of relying on centralized cloud systems. By enabling real-time analysis and decision-making, edge computing addresses the critical need for low latency and rapid responses in combat situations, where every second counts.
   
• A key trend in military information processing is the increased use of big data analytics and AI-driven predictive models. These technologies enhance decision-making and operational planning by analyzing vast amounts of data from satellites, drones, communication networks, and battlefield sensors. AI algorithms process this information in real-time, identifying patterns and generating predictions about enemy movements, resource allocation, and potential threats, thereby improving overall military effectiveness.

North America dominated the AI & analytics in military & defense market in 2024 with a 37.7% share. AI integration into autonomous systems, including UAVs, ground robots, and ships, is a key trend in U.S. military technology. These AI-enhanced systems operate with minimal human intervention, making real-time decisions and adapting to complex battlefield environments. This advancement is particularly impactful in intelligence, surveillance, and reconnaissance missions, where autonomous systems efficiently gather data over larger areas than human-controlled assets.
 

Germany's defense sector is embracing AI integration in military platforms and systems. The armed forces are investing in AI-enhanced technologies like autonomous vehicles, unmanned aerial systems, and robotic systems. These platforms use AI and machine learning for real-time decision-making, navigation, and mission optimization. AI-equipped combat drones, for example, offer improved targeting, reconnaissance, and surveillance while reducing risks to soldiers. This aligns with Germany's goal of enhancing force multiplication, allowing fewer personnel to manage more assets effectively through AI-augmented decision-making.
 

China is heavily investing in AI-powered autonomous military systems, including drones, robotic ground vehicles, and unmanned naval vessels. These platforms enhance operational efficiency, precision, and cost-effectiveness while reducing risks to human soldiers. AI improves autonomous navigation, target recognition, and real-time decision-making in combat and surveillance missions. By leveraging these technologies, China gains strategic advantages through improved battlefield intelligence, reduced reliance on human personnel, and enhanced defense operations in contested environments.
 

South Korea's defense strategy emphasizes autonomous systems development. The country invests heavily in AI-powered drones, unmanned ground vehicles (UGVs), and unmanned surface vehicles (USVs) to boost operational capabilities. AI enhances autonomous navigation, target identification, and real-time mission planning, reducing human involvement while improving military efficiency. This focus on autonomous combat systems allows South Korea to respond more effectively to emerging threats, particularly in contested areas like the Korean Peninsula.
 

AI & Analytics in Military & Defense Market Share

The AI and analytics market in military and defense is fiercely competitive. Key players like Avathon, Shield AI, Raytheon, BAE Systems, and Thales lead the field. They focus on developing autonomous systems, AI analytics, and cutting-edge defense tech across areas such as cybersecurity and surveillance. Competition isn't just about innovation; it's also about winning government contracts and forming strategic partnerships. Companies constantly work to integrate AI into defense systems, aiming to boost performance, security, and efficiency. This ongoing push drives both tech advances and market positioning in this fast-changing sector.
 

AI & Analytics in Military & Defense Market Companies

Major players operating in the AI & analytics in military & defense industry are:

• Avathon
• BAE Systems
• CACI International
• Charles River Analytics
• IBM
• L3Harris Technologies
• Leonardo
• Lockheed Martin
• Northrop Grumman
• Nvidia
• Rafael Advanced Defense Systems
• Raytheon Technologies
• Saab
• Safran
• Shield AI
• Thales
   

AI & Analytics in Military & Defense Industry News

• In January 2023, Lockheed Martin began integrating AI technologies into the Aegis Combat System lifecycles. This move aims to enhance fleet capabilities and address emerging threats. The company focuses on agile, urgent, and cost-effective innovation to deliver mission-focused defense solutions.
   
• In September 2023, Safran acquired Preligens, a company specializing in artificial intelligence (AI) for aerospace and defense. The acquisition, valued at USD 244 million, led to Preligens being rebranded as Safran.AI. This new entity now operates as part of Safran Electronics & Defense, strengthening Safran's capabilities in AI-driven aerospace and defense technologies.
   

This AI & analytics in military & defense market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD million) from 2021 to 2034, for the following segments:

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Market, By Offering

• Hardware
• Software
  • Cloud
  • On-premise 
• Services
  • Deployment & integration
  • Upgrades & maintenance
  • Software support
  • Others

Market, By Installation Type

• New installation
• Upgradation

Market, By Technology

• Machine learning
• Natural language processing
• Context-aware computing
• Computer vision
• Intelligent virtual agent (Iva) /virtual agents
• Others

Market, By Application

• Warfare platforms
• Cybersecurity
• Logistics & transportation
• Surveillance & situational awareness
• Command & control
• Battlefield healthcare
• Simulation & training
• Threat detection
• Information processing
• Others

Market, By Platform

• Airborne
  • Fighter aircraft
  • Special mission aircraft
  • Helicopters
  • Unmanned aerial vehicles (UAV) 
• Land
  • Military fighting vehicles (MFV)
  • Unmanned ground vehicles (UGV)
  • Weapons systems
  • Headquarter & command centers
• Naval
  • Ships
  • Submarines
  • Unmanned marine vehicles (UMVs)
• Spaces
  • CubeSats
  • Satellites

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia 
• Latin America
  • Brazil
  • Mexico 
• MEA
  • UAE
  • Saudi Arabia
  • South Africa