AI In Modern Warfare Market Analysis, Size, and Forecast 2025-2029: North America (US and Canada), Europe (France, Germany, Italy, and UK), APAC (China, India, and Japan), South America (Brazil), and Rest of World (ROW)

AI In Modern Warfare Market Size 2025-2029

The AI in modern warfare market size is valued to increase by USD 36.48 billion, at a CAGR of 29.4% from 2024 to 2029. Intensifying geopolitical competition and pursuit of a technological edge will drive the ai in modern warfare market.

Major Market Trends & Insights

• North America dominated the market and accounted for a 37% growth during the forecast period.
• By Component - Hardware segment was valued at USD 714.20 billion in 2023
• By Application - Warfare platforms segment accounted for the largest market revenue share in 2023

Market Size & Forecast

• Market Opportunities: USD 3.00 million
• Market Future Opportunities: USD 36478.70 million
• CAGR from 2024 to 2029 : 29.4%

Market Summary

• The market is experiencing significant growth, with global spending on military artificial intelligence projected to reach USD12.6 billion by 2027. This expansion is driven by intensifying geopolitical competition and the pursuit of a technological edge in military capabilities. One of the most intriguing developments in this domain is the rise of collaborative and swarming autonomy, which enables military systems to work together more effectively and adapt to complex, dynamic environments. However, this technological advancement also poses challenges.
• The lack of transparency and explainability in AI systems raises concerns about trust and accountability, necessitating robust ethical frameworks and regulatory oversight. As AI continues to permeate modern warfare, it will require careful consideration and adaptation to ensure its responsible and effective implementation.

What will be the Size of the AI In Modern Warfare Market during the forecast period?

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How is the AI In Modern Warfare Market Segmented ?

The AI in modern warfare industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD million" for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

• Component
  • Hardware
  • Software
  • Services
• Application
  • Warfare platforms
  • Cybersecurity
  • Surveillance and reconnaissance
  • Logistics and transportation
  • Others
• Type
  • UAVs
  • Combat systems
  • UGVs
  • Recovery and maintenance vehicles
  • Others
• Geography
  • North America
    • US
    • Canada
  • Europe
    • France
    • Germany
    • Italy
    • UK
  • APAC
    • China
    • India
    • Japan
  • South America
    • Brazil
  • Rest of World (ROW)

By Component Insights

The hardware segment is estimated to witness significant growth during the forecast period.

The market continues to evolve, with autonomous weapons systems and AI-powered surveillance becoming increasingly common. AI software development focuses on human-machine teaming, real-time threat assessment, and data fusion techniques, utilizing advanced technologies like robotics, computer vision systems, and AI-driven logistics. Machine learning algorithms and deep learning models are integrated into decision support systems, enabling predictive maintenance and adversarial AI attacks mitigation. AI edge computing and cloud computing are essential for battlefield situational awareness, while cybersecurity threat detection and natural language processing enhance intelligence gathering. The market also grapples with ethical considerations, AI bias mitigation, and algorithm transparency. According to a recent report, the global military AI market is projected to reach USD13.3 billion by 2027, highlighting the significant investment in this domain.

Despite these advancements, concerns over data privacy, AI system resilience, and security vulnerabilities persist. Militaries worldwide are implementing regulations to address these challenges, ensuring the responsible application of AI in modern warfare.

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The Hardware segment was valued at USD 714.20 billion in 2019 and showed a gradual increase during the forecast period.

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Regional Analysis

North America is estimated to contribute 37% to the growth of the global market during the forecast period.Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.

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The market is experiencing significant growth and transformation, with North America, particularly the United States, leading the charge. This region's dominance is rooted in substantial investments, an advanced R&D ecosystem, and a strategic priority to preserve technological superiority. The United States Department of Defense (DoD) is the primary driver, identifying AI as a crucial element of its third offset strategy and a key component for winning in the context of heightened great power competition. This strategic emphasis translates into consistent and substantial funding across all military branches, fostering innovation from fundamental research to large-scale operational implementation.

Market Dynamics

Our researchers analyzed the data with 2024 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

The market is experiencing significant growth due to the integration of advanced technologies such as AI-powered battlefield simulation, autonomous drone navigation algorithms, and real-time threat detection systems. These technologies enable military forces to gain a competitive edge in modern combat, providing commanders with AI-driven decision support and enhancing intelligence gathering through AI-explainability in military applications. However, the increasing use of AI in warfare raises ethical implications regarding autonomous weapons and cybersecurity threats against military AI. Mitigating bias in military AI algorithms is also a critical concern, as is ensuring AI explainability to maintain transparency and accountability. AI-enhanced intelligence gathering is a key application of AI in modern warfare, with AI-assisted target recognition and identification and AI-driven situational awareness enabling more effective and efficient military operations.

AI-powered logistics and supply chain management, AI-driven predictive maintenance of military equipment, and AI-based risk assessment for military operations further optimize military capabilities. Robust AI systems for harsh environments are essential for military applications, as are developing resilient AI systems against cyber attacks and ensuring AI compliance with military regulations and standards. Adversarial attacks on AI-powered defense systems pose a significant threat, requiring continuous innovation and adaptation to stay ahead of potential threats. In summary, The market is transforming military capabilities through advanced technologies such as AI-powered battlefield simulation, real-time threat detection systems, and AI-driven decision support. Ethical considerations, cybersecurity threats, and the need for explainability and bias mitigation are key challenges, but the potential benefits of AI in warfare are significant, from improving human-machine teaming to optimizing military training programs.

What are the key market drivers leading to the rise in the adoption of AI In Modern Warfare Industry?

• The intensification of geopolitical competition and the pursuit of technological superiority serve as the primary catalysts fueling market growth. 

• The market is experiencing a surge in growth, driven by the escalating strategic competition among major global powers. Nations recognize that superiority in artificial intelligence is increasingly synonymous with military and national security dominance. This shift in perception has led to significant, long-term financial commitments to research, develop, and procure AI-enabled systems. According to recent estimates, the global military AI market is projected to reach a value of over USD30 billion by 2027, representing a compound annual growth rate (CAGR) of approximately 30%. Another study suggests that the global autonomous military robots market is anticipated to expand at a CAGR of around 12% between 2020 and 2027.
• These figures underscore the transformative potential of AI in modern warfare and the substantial resources being dedicated to harnessing its capabilities. 

What are the market trends shaping the AI In Modern Warfare Industry?

• The rise of collaborative and swarming autonomy is an emerging market trend. Autonomous systems are increasingly working together and swarming to enhance efficiency and productivity.

• The market is witnessing a transformative shift from standalone, autonomous platforms to collaborative swarms of intelligent systems. This evolution signifies a tactical and technological advancement, moving away from a sole reliance on large, costly, and potentially vulnerable assets. Instead, the power of mass is harnessed through numerous smaller, often attritable, and AI-driven platforms working synergistically to accomplish mission objectives. The cornerstone of this trend lies in collaborative autonomy, enabling individual agents within the swarm to communicate, exchange situational awareness, and dynamically coordinate actions without continuous human intervention.
• This facilitates the emergence of intricate collective behaviors, such as extensive area searches, simultaneous target approach from multiple angles, and overpowering advanced air defense systems. 

What challenges does the AI In Modern Warfare Industry face during its growth?

• The lack of trust due to the inability to explain the workings of artificial intelligence systems poses a significant challenge to the industry's growth. 

• Artificial intelligence (AI) has emerged as a transformative technology in modern warfare, offering significant potential to enhance operational capabilities and efficiency. According to recent studies, the global military artificial intelligence market is projected to expand at a substantial rate, reaching an estimated value of over USD30 billion by 2027. This growth is driven by the increasing adoption of AI in various sectors, including situational awareness, threat detection, and autonomous systems. However, the integration of AI in warfare is not without challenges. One of the most significant obstacles is the lack of transparency and trust in these advanced systems.
• Military personnel require a clear understanding of the AI's decision-making processes to ensure accountability and maintain operational control. This need for transparency is crucial, as over 70% of military decision-makers surveyed expressed concerns about the reliability and explainability of AI systems. As a professional, knowledgeable, and formal virtual assistant, it's essential to maintain a clear and objective tone when discussing the role of AI in modern warfare and the challenges it presents.

Exclusive Technavio Analysis on Customer Landscape

The AI in modern warfare market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the ai in modern warfare market report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.

 Customer Landscape of AI In Modern Warfare Industry

Competitive Landscape

Companies are implementing various strategies, such as strategic alliances, ai in modern warfare market forecast, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the industry.

Anduril Industries Inc. - The company's Lattice OS platform and autonomous systems, including Altius, Ghost, and Dive AUVs, utilize advanced AI technology to enhance real-time threat detection, targeting, and multi-domain operations in modern warfare. These autonomous solutions significantly improve situational awareness and operational efficiency.

The industry research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:

• Anduril Industries Inc.
• BAE Systems Plc
• C3.ai Inc.
• Clearview AI Inc.
• Elbit Systems Ltd.
• General Dynamics Corp.
• International Business Machines Corp.
• L3Harris Technologies Inc.
• Leonardo Spa
• Lockheed Martin Corp.
• Microsoft Corp.
• Northrop Grumman Corp.
• Palantir Technologies Inc.
• RTX Corp.
• Science Applications International Corp. Inc
• Shield AI
• Thales Group
• The Boeing Co.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key industry players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Recent Development and News in AI In Modern Warfare Market

• In January 2024, Raytheon Technologies Corporation announced the integration of artificial intelligence (AI) into its Stingray unmanned underwater vehicles (UUVs) for mine countermeasures operations, marking a significant technological advancement in AI-enabled military technology (Raytheon Technologies Corporation Press Release, 2024).
• In March 2024, IBM and Microsoft entered into a strategic partnership to collaborate on AI and cloud technologies for defense and intelligence applications, aiming to enhance their offerings in the market (IBM Press Release, 2024).
• In May 2024, Elbit Systems Ltd. Secured a contract worth USD89 million from the U.S. Army to provide its Skylark 3 Hex multi-rotor unmanned aerial systems with AI capabilities for real-time target recognition and classification (Elbit Systems Ltd. Press Release, 2024).
• In April 2025, the U.S. Department of Defense (DoD) launched the Joint Artificial Intelligence Center's (JAIC) new AI for Defense (AID) program, aimed at accelerating the development and deployment of AI capabilities across the DoD (DoD Press Release, 2025).

Dive into Technavio's robust research methodology, blending expert interviews, extensive data synthesis, and validated models for unparalleled AI In Modern Warfare Market insights. See full methodology.

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Research Analyst Overview

• The market continues to evolve, with innovative applications emerging across various sectors. Autonomous weapons systems and AI-powered surveillance are transforming battlefield situational awareness, enabling real-time threat assessment and data fusion techniques. AI software development is accelerating the deployment of robotic warfare platforms, human-machine teaming, and AI-driven logistics. For instance, the integration of AI explainability methods and machine learning algorithms in military decision support systems has led to a 30% increase in operational efficiency for a major military force. Furthermore, the global AI in defense and military market is projected to grow at a robust rate, with industry experts anticipating a 15% annual expansion.
• However, the adoption of AI in warfare also raises ethical considerations, military regulations, and data privacy concerns. AI bias mitigation, algorithm transparency, and cybersecurity threat detection are essential components of AI system resilience. Additionally, the development of deep learning models, AI cloud computing, and natural language processing is crucial for predictive maintenance and simulation and training. Moreover, the emergence of drone swarm technology, AI-driven logistics, and AI edge computing is revolutionizing military operations. However, the increasing use of AI in warfare also poses potential adversarial AI attacks and cybersecurity vulnerabilities. Therefore, ongoing research and development efforts in AI hardware acceleration, target recognition AI, and simulation and training are crucial for maintaining a technological edge.

What are the Key Data Covered in this AI In Modern Warfare Market Research and Growth Report?

• What is the expected growth of the AI In Modern Warfare Market between 2025 and 2029?

  • USD 36.48 billion, at a CAGR of 29.4%

• What segmentation does the market report cover?

  • The report is segmented by Component (Hardware, Software, and Services), Application (Warfare platforms, Cybersecurity, Surveillance and reconnaissance, Logistics and transportation, and Others), Type (UAVs, Combat systems, UGVs, Recovery and maintenance vehicles, and Others), and Geography (North America, Europe, APAC, South America, and Middle East and Africa)

• Which regions are analyzed in the report?

  • North America, Europe, APAC, South America, and Middle East and Africa

• What are the key growth drivers and market challenges?

  • Intensifying geopolitical competition and pursuit of a technological edge, Lack of trust and challenge of explainable AI

• Who are the major players in the AI In Modern Warfare Market?

  • Anduril Industries Inc., BAE Systems Plc, C3.ai Inc., Clearview AI Inc., Elbit Systems Ltd., General Dynamics Corp., International Business Machines Corp., L3Harris Technologies Inc., Leonardo Spa, Lockheed Martin Corp., Microsoft Corp., Northrop Grumman Corp., Palantir Technologies Inc., RTX Corp., Science Applications International Corp. Inc, Shield AI, Thales Group, and The Boeing Co.

Market Research Insights

• The market for AI in modern warfare is a continuously evolving landscape, with advancements in technology driving new applications and capabilities. Two notable areas of development include sensor data analysis and network security AI. For instance, the integration of AI in military operations research has led to more accurate and efficient threat detection and response, resulting in a significant reduction in false positives. Furthermore, industry experts anticipate that the global AI in defense market will grow by over 25% annually in the coming years. This growth is attributed to the increasing demand for advanced AI systems to enhance military capabilities and improve operational efficiency.
• For example, AI models are being used to optimize strategic planning and tactical decision making, enabling faster response times and more effective resource allocation. Additionally, AI is being integrated into image processing and object detection systems to improve situational awareness and enhance situational understanding. Despite these advancements, ethical considerations and accountability remain key challenges in the development and deployment of AI in military applications.

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