Rising geopolitical tensions, defense budget expansion, and rapid adoption of AI-powered surveillance and autonomous systems accelerate global market growth.
Austin, Texas, Jan. 30, 2026 (GLOBE NEWSWIRE) — Artificial Intelligence in Defense Market Size & Growth Analysis:
According to SNS Insider, the Artificial Intelligence in Defense Market size is valued at USD 9.13 billion in 2025 and is expected to reach USD 29.48 billion by 2035, growing at a CAGR of 12.48 % from 2026-2035. The demand for improved situational awareness and decision-making, as well as significant defense modernization projects, are driving the rapid growth of the artificial intelligence in defense market.
Market Size and Forecast
- Market Size in 2025: USD 9.13 Billion
- Market Size by 2035: USD 29.48 Billion
- CAGR: 12.48 % from 2026 to 2035
- Base Year: 2025
- Forecast Period: 2026–2035
- Historical Data: 2022–2024
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U.S. Artificial Intelligence in Defense Market is valued at USD 2.88 billion in 2025 and is expected to reach USD 9.17 billion by 2035, growing at a CAGR of 12.30 % from 2026-2035. The U.S. Artificial Intelligence in Defense Market is growing due to strong defense modernization programs and increased investment in AI-driven intelligence, surveillance, and autonomous systems.
Growing Need for Advanced Defense Systems to Propel Market Growth Globally
In order to handle changing security threats, modern defense operations increasingly need quick data processing, real-time intelligence, and automated decision-making. Advanced surveillance, picture recognition, and pattern analysis are made possible by AI, which allows for quicker and more accurate threat detection than conventional systems. To improve situational awareness and operational effectiveness, militaries all over the world are incorporating AI into intelligence analysis, battlefield management systems, and command-and-control platforms. AI-driven military solutions are crucial for preserving strategic advantage and enhancing mission performance in the land, air, sea, and space domains due to the increasing complexity of contemporary conflict, which includes asymmetric and cyber threats.
High Development and Deployment Costs May Limit Adoption in Emerging Economies
Despite strong growth prospects, adoption remains constrained by the high development and deployment costs associated with AI-enabled defense systems. Significant investment is required in advanced computing infrastructure, software development, data processing capabilities, and skilled workforce training.
Integration challenges, system testing, cybersecurity safeguards, and maintenance expenses further increase financial burdens. Budget limitations in developing countries restrict large-scale adoption of advanced AI defense solutions. Additionally, continuous upgrades and technology evolution create long-term expenditure requirements, widening capability gaps between developed and emerging economies and potentially slowing overall market expansion.
Major Artificial Intelligence in Defense Market Companies Analysis Listed in the Report are
- Lockheed Martin Corporation
- Northrop Grumman Corporation
- Raytheon Technologies Corporation
- BAE Systems plc
- Thales Group
- General Dynamics Corporation
- IBM Corporation
- Microsoft Corporation
- NVIDIA Corporation
- Palantir Technologies Inc.
- L3Harris Technologies
- Elbit Systems Ltd.
- Leonardo S.p.A.
- Saab AB
- Boeing Defense, Space & Security
- Israel Aerospace Industries (IAI)
- Rafael Advanced Defense Systems Ltd.
- Honeywell International Inc.
- Kratos Defense & Security Solutions
- CACI International Inc.
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Segmentation Analysis:
By Technology
Machine Learning led with 32% share due to its wide deployment across threat detection, predictive maintenance, intelligence analysis, and mission planning. Robotics and autonomous systems represent the fastest-growing AI technology segment as militaries prioritize unmanned and semi-autonomous operations.
By Application
Surveillance & Reconnaissance led with 28% share due to the critical need for real-time situational awareness and intelligence superiority. Autonomous vehicles and drones are the fastest-growing application segment as militaries increasingly deploy unmanned systems for combat, logistics, and reconnaissance missions.
By Platform
Airborne Systems led with 30% share due to extensive use in UAVs, surveillance aircraft, and combat aviation. Space-based systems are the fastest-growing platform segment as defense agencies expand investments in satellite surveillance, communications, and missile detection.
By Component
Software Platforms & AI Algorithms led with 35% share as they form the intelligence layer enabling defense applications. Services and consulting are the fastest-growing component segment due to the complexity of deploying AI in defense environments.
Regional Insights:
North America dominated the Artificial Intelligence in Defense Market with a 39.00% share in 2025 due to advanced military infrastructure, high defense spending, and strong government initiatives supporting AI adoption in surveillance, autonomous systems, and cybersecurity.
Asia Pacific is expected to grow at the fastest CAGR of about 13.99% from 2026–2035, driven by increasing defense budgets, modernization of military equipment, and rising adoption of AI-based surveillance, unmanned systems, and cybersecurity solutions.
Recent Developments:
- June 2024, Lockheed Martin announced full integration of AI-powered computer vision from the U.S. DoD’s Project Maven into the F-35 Lightning II and Integrated Air and Missile Defense (IAMD) systems.
- March 2025, Northrop Grumman announced the operational deployment of MAF 2.0 on its Collaborative Combat Aircraft (CCA) prototype, selected under the U.S. Air Force’s CCA program.
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Exclusive Sections of the Report (The USPs):
- AUTONOMY & HUMAN–MACHINE TEAMING METRICS – helps you assess how rapidly defense forces are shifting toward semi-autonomous and autonomous operations, including human-in-the-loop vs. human-on-the-loop mission structures.
- DATA & COMPUTE INFRASTRUCTURE INTENSITY – helps you understand the scale of defense data processed by AI systems and the balance between edge AI and centralized cloud architectures shaping real-time decision-making.
- DEFENSE-GRADE AI HARDWARE DEPLOYMENT – helps you identify growth in AI chips, accelerators, and compute power requirements per platform, directly impacting procurement and modernization strategies.
- AI-ENHANCED CYBERSECURITY EFFECTIVENESS – helps you measure how AI adoption is reducing cyber incident response time and false positives in mission-critical defense environments.
- AI IN ELECTRONIC WARFARE & SIGNAL INTELLIGENCE – helps you track the increasing use of AI across electronic warfare, spectrum management, and cyber countermeasures, indicating future battlefield dominance trends.
About the Report
The Artificial Intelligence in Defense Market Report delivers comprehensive insights, including:
- Market size and forecasts (2022–2035)
- Detailed segmentation and regional analysis
- Competitive benchmarking and company profiling
- Technology trends, opportunities, and challenges
- Strategic insights for investors and industry stakeholders
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