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The Artificial Intelligence (AI) in Military Market size is estimated to grow by USD 23.68 billion at a CAGR of 30.67% between 2022 and 2027. Increased government spending on defense due to conflicts is driving market growth by increasing the funding available for the development and deployment of AI-based military technology and self-driving systems. Rising private investment in R&D of AI-based military technology, driven by the potential for significant advancements in military capabilities, is also boosting market expansion by driving innovation in AI technologies for military applications. Additionally, the growing development of self-driving systems, driven by advancements in AI and automation technologies, is driving market growth by increasing the adoption of autonomous systems for military and defense purposes. Overall, these factors are driving the growth of the market in military and defense technologies.
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This market report extensively covers market segmentation by component (software, hardware, and services), type (new procurement and upgradation), and geography (North America, Europe, APAC, Middle East and Africa, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
The market share growth by the software segment will be significant during the forecast period. The software segment held the largest market share in the market in 2022. The software segment is expected to grow significantly due to the significance of AI in strengthening IT infrastructure to prevent any form of data breaches. Developers can use the software to create intelligent applications, whether they want to enhance existing applications with machine learning or speech recognition or develop new applications using an AI platform.
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The software segment showed a gradual increase in the market share of USD 1.82 billion in 2017. This technology is used to sift through satellite images, and video feeds from drones, helping the military better understand what is happening on the battlefield, make faster decisions, and then target enemies faster and more accurately. The military software is designed for training, surveillance, cybersecurity, and other roles according to requirements. For example, security software uses AI algorithms to identify potential threats and breaches, thereby enhancing military security. Military software solutions help the military to operate smarter, safer, and more efficiently which increases the artificial intelligence in military market demand. Positioning AI as a transformative force in shaping the future of the military sector is expected to fuel the growth of the software segment, which will thereby drive the growth of the market during the forecast period.
The new procurement segment held the largest market share by installation in the market in 2022. This is owing to the government's push to integrate AI into the military sector, as well as the rise of advancements in AI innovation. For example, in July 2023, the US Army announced that it is working to accelerate the acquisition and adoption of AI. As part of the Pentagon's strategy to increase the use of AI and machine learning technology, the Department of Defense (DoD) is accelerating the procurement process. The tactical and operational benefits that AI and machine learning bring to the armed forces have prompted the US Department of Defense to seek ways to increase and accelerate the adoption of its services and agencies.
Moreover, the growing investment of governments across the world to enhance AI research and training is further fueling the demand for new procurement of these solutions in the market. Such factors will drive the growth of the new procurement segment, which will thereby drive the growth of the market during the forecast period.
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North America is estimated to contribute 57% 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. In 2022, North America held the largest market share of the market, which can be attributed to the growing use of IoT and big data, as well as the increasing reliance of the defense industry on data analytics and other cloud-based services and applications. To secure country boundaries and give military authorities high security, the defense sector is implementing AI technologies in security and surveillance activities. The US has been at the forefront of developing and procuring artificial intelligence solutions and services in the defense sector due to increasing conflicts between neighboring countries and the growing need to suppress various militant groups in several parts of the world.
However, due to their robust economies, the US, Canada, and Mexico have the most developed defense sectors across the world. The growth of the sector is expected to be fueled by the government's increasing defense spending to support its adoption in the military sector. Thus, with the growing emphasis on adopting new technologies in the military sector to continue the dominance of developed countries, especially the US, the regional market is expected to grow significantly during the forecast period.
The market is advancing rapidly, with applications across various military sectors. AI and machine learning (ML) technologies are transforming the military industry, particularly in the development of autonomous weapons systems and surveillance and reconnaissance. AI plays a crucial role in enhancing cybersecurity measures and optimizing command and control systems. Additionally, AI is revolutionizing logistics and transportation in the military through the use of AI-enabled solutions for efficient operations. Leading countries are heavily investing in AI to bolster their defense forces and improve military capabilities, driving global military spending and shaping the future of warfare.
Increased government spending on defense due to conflicts is notably driving market growth. The increasing development and acquisition of AI-powered weapon systems are primarily driven by the rising number of global territorial disputes, prompting investments in various types of weapon systems. This trend is particularly notable in leading countries with significant defense forces, where defense spending and expenditure on advanced military technologies are key priorities. The escalating global military spending reflects the growing importance of advanced defense technologies, including AI-powered weapon systems, in modern warfare. The extension of China's sea borders into the southeast, a key trade route handling over 5 trillion in annual trade, has caused tensions with nations like Brunei, Malaysia, the Philippines, Taiwan, and Vietnam.
Each country is required to respect its ocean borders and cannot enter the territorial waters of other nations without permission. China's construction of artificial islands has further escalated tensions among these nations. This escalating tension is fueling the demand for advanced weapons and weapon systems, leading nations to collaborate on the development of highly advanced defense weapons, thereby increasing the market demand. This includes the development of unmanned aerial vehicles (UAVs), unmanned ground vehicles (UGVs), military laser systems, and other AI-enabled solutions to enhance military capabilities. These factors are expected to drive market growth in the forecast period.
The growing integration of AI in space-based systems is an emerging trend shaping the market growth. The combination of artificial intelligence technologies in space-based frameworks, for example, satellites, space tests, and other space resources is important for space probes and more. In space missions, artificial intelligence improves information handling, data analytics, and communication capabilities. Information from sensors and cameras of satellites can be examined by using AI algorithms to track objects and recognize possible dangers.
In addition, developed and developing countries are significantly boosting the adoption of these technologies in their space programs owing to the advantages associated with AI which will have a positive impact on market growth. The growing space programs and integration of artificial intelligence in space-based systems are expected to fuel the growth of the market during the forecast period.
The shortage of AI experts is a significant challenge hindering market growth. Most companies lack the expertise and resources that are needed to take full advantage of AI. Machine learning and deep learning applications need access to large data sets and specialized infrastructure and processing power. A dedicated team of AI experts is needed to carry out the tasks. AI experts are difficult to find as there is a big competition among the top technology companies to hire the best talent. Companies also need to look at the appropriate use cases of AI/machine learning algorithm deployment before implementing them at a large scale. All of these require high investments, which makes artificial intelligence out of reach of most small-sized technology companies and makes it difficult for them to take advantage of AI.
Moreover, the lack of experts is slowing down the development of strong AI technology. The development of AI has created many jobs, and there are institutions globally that have courses designed to train individuals. However, this has not been beneficial for the expert base of strong artificial intelligence developers which will restrict the artificial intelligence in military market growth. Thus, the shortage of experts is one of the potential challenges that may impede the growth of market during the forecast period.
The market 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 report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
BAE Systems Plc - The company offers artificial intelligence in military such as VRAI that works together to harness the power of virtual reality and artificial intelligence to explore the next generation of training for military forces of tomorrow.
Charles River Analytics Inc. - The company offers artificial intelligence in military such as ASIMOV, Charles river analytics, and human centric AI.
General Dynamics Corp - The company offers artificial intelligence in the military such as GDIT offers the capabilities and services needed for the Army to take multi-domain operations from vision to reality.
The research report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:
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 market 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.
The market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
The market is witnessing rapid growth driven by the increasing adoption of AI applications and systems across various defense applications. AI-enabled weapon systems and autonomous military systems are enhancing operational capabilities and situational awareness on the battlefield. Factors such as battlefield healthcare advancements and logistics & transportation improvements are further propelling market growth. However, ethical and legal concerns along with security and privacy issues are some of the restraining factors affecting market expansion. Overall, the market is characterized by a focus on cybersecurity solutions, decision-making processes, and threat/target monitoring and tracking using state-of-the-art technologies like quantum computing and simulation & training.
The market is influenced by various factors, including the evolution of binary-based classical computing towards more advanced IT frameworks. Command & control systems are increasingly incorporating AI to enhance decision-making processes. Global defense expenditure is driving investments in artificial intelligence for warfare platforms and training and simulation applications. Digital security and regulatory compliances are critical considerations due to the growing threat of security breaches. Innovations such as Embroker and Sycamore are shaping the market's future, focusing on information processing, memory, network capabilities, and processor advancements. International conflicts underscore the need for these solutions, making the market dynamic and responsive to warfield requirements.
Market Scope |
|
Report Coverage |
Details |
Page number |
164 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 30.67% |
Market growth 2023-2027 |
USD 23,681.35 million |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
28.21 |
Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
Performing market contribution |
North America at 57% |
Key countries |
US, China, Japan, Russia, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Anduril Industries Inc., BAE Systems Plc, C3.ai Inc., Charles River Analytics Inc., Darktrace Holdings Ltd., General Dynamics Corp., International Business Machines Corp., L3Harris Technologies Inc., Lockheed Martin Corp., Northrop Grumman Corp., NVIDIA Corp., Palantir Technologies Inc., Rafael Advanced Defense Systems Ltd., Raytheon Technologies Corp., Rheinmetall AG, Saab AB, Safran SA, Shield AI, SparkCognition Inc., and Thales Group |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, market growth analysis, market research and growth, market growth and forecasting, Market forecasting, market forecast, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
Customization purview |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Component
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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