Europe Artificial Intelligence in Defense Market Forecast to 2028 -Regional Analysis

The Europe artificial intelligence in defense market is expected to grow from US$ 1,775.91 million in 2023 to US$ 3,143.65 million by 2028. It is estimated to grow at a CAGR of 12.1% from 2023 to 2028.

Increasing Government Spending on Defense Fuels Europe Artificial Intelligence in Defense Market

As geopolitical tensions have persisted over the last few years, various affected nations plan and take measures to improve and recapitalize their defense budget and strategies. Changes in the modern warfare system have been urging governments to allocate high funds for respective military forces. Budget allocation enables military forces to procure advanced technologies and equipment from domestic and international manufacturers. Also, soldier and military vehicle modernization practices are increasing across numerous countries. Owing to the growing need to strengthen military forces with advanced technologies, armaments, artilleries, and vehicles, defense forces are investing substantial amounts in the aforementioned products. A continuous urge to deploy new technologies in combat and noncombat operations by the defense forces is boosting defense spending. The increasing geopolitical tensions and trade wars among major countries are driving high investments in the defense sector. A significant portion of the investment is dedicated to the procurement of artificial intelligence in defense research. Further, according to some studies, Russia spends about US$ 12.5 million annually on AI, where many of Russia's artificial intelligence demonstrations are military applications, such as AI-assisted combat aircraft and automatic artillery. Therefore, the increasing government spending on incorporating AI in the defense sector is driving the growth of the Europe artificial intelligence in defense market.

Europe Artificial Intelligence in Defense Market Overview

European Union states AI is likely to play a key role in defining the competitiveness and productivity of European countries over the next several decades, with early adopters gaining enormous social, economic, and geopolitical benefits. The European Defense Agency aims to strengthen its research and development (R&D) operations related to AI capabilities for military applications, further boosting the strategic autonomy of the region. According to SIPRI, the military expenditure of Europe increased from US$ 306.48 billion in 2020 to US$ 331.34 billion in 2021. In addition, European countries have a robust industrial foundation and expertise required for AI research. Moreover, an upsurge in military expenditure bolsters the adoption of technologies such as AI and ML in the defense sector. France has expressed a strong interest in military AI as it sees AI as one of the bases of geopolitical competition. The European Union (EU) and North Atlantic Treaty Organization (NATO) can accelerate the adoption of AI in the defense sectors in European countries through international engagements and alliances for better AI governance. In October 2021, NATO announced an investment of US$ 1 billion to launch an AI strategy built to develop new products with AI capabilities in the area of data analysis, cyber-defense, and imagery. Further, due to the ongoing Russia-Ukraine war, armed forces in European countries are adopting high-tech solutions to get real-time data on the war situations. In December 2022, the Ministry of Defense of the UK signed an extended three-year US$ 91.39 million deal with Palantir Technologies Inc., a data analytics company, to gain extended access to the company’s software to get real-time war situations. The software also helps the ministry make predictions using AI, which assists in efficient decision-making.

Exhibit: Europe Artificial Intelligence in Defense Market Revenue and Forecast to 2028 (US$ Million)

Europe Artificial Intelligence in Defense Market Segmentation

The Europe artificial intelligence in defense market is segmented into component, technology, platform, application, and country.

Based on component, the Europe artificial intelligence in defense market is segmented into hardware, software and services. The software segment held the largest share of the Europe artificial intelligence in defense market in 2023.

Based on technology, the Europe artificial intelligence in defense market is segmented into advanced computing, ai systems and learning and intelligence. The advanced computing segment held the largest share of the Europe artificial intelligence in defense market in 2023.

Based on platform, the Europe artificial intelligence in defense market is segmented into naval, land, and air. The land segment held the largest share of the Europe artificial intelligence in defense market in 2023.

Based on application, the Europe artificial intelligence in defense market is segmented into cyber security, battlefield healthcare, logistics and transportation, warfare platform and others. The warfare segment held the largest share of the Europe artificial intelligence in defense market in 2023.

Based on country, the Europe artificial intelligence in defense market is segmented int o Germany, the UK, France, Italy, Russia, and the Rest of Europe. The Russia dominated the share of the Europe artificial intelligence in defense market in 2023.

BAE Systems Plc; International Business Machines Corp; Leidos Holdings Inc; Lockheed Martin Corp; Raytheon Technologies Corp; Thales SA are the leading companies operating in the Europe artificial intelligence in defense market.