AI & Analytics in Military & Defense Market Size

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.

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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.