Artificial Intelligence in Modern Warfare Market Report 2026

The artificial intelligence in modern warfare market size has grown exponentially in recent years. It will grow from $8.69 billion in 2025 to $11.94 billion in 2026 at a compound annual growth rate (CAGR) of 37.5%. The growth in the historic period can be attributed to modernization of defense forces, increasing geopolitical tensions, advancements in military technology, need for battlefield intelligence, demand for operational efficiency.

The artificial intelligence in modern warfare market size is expected to see exponential growth in the next few years. It will grow to $42.26 billion in 2030 at a compound annual growth rate (CAGR) of 37.2%. The growth in the forecast period can be attributed to growth of autonomous weapon systems, increased defense spending, adoption of AI for strategic planning, expansion of cyber warfare capabilities, focus on unmanned systems. Major trends in the forecast period include autonomous combat systems, ai-driven surveillance and reconnaissance, intelligent defense cybersecurity, decision support systems for military operations, ai-enabled logistics and supply chains.

Growing defense spending is anticipated to drive the expansion of artificial intelligence in the modern warfare market in the coming years. Military expenditure refers to the funds allocated by a nation or government toward its armed forces and associated operations. An increase in military spending supports the development and deployment of advanced AI technologies to strengthen defense capabilities and overall operational efficiency. For instance, in April 2025, the Stockholm International Peace Research Institute (SIPRI), a Sweden-based international organization, reported that global military expenditure increased by 9.4% in real terms in 2024, reaching US $2.71 trillion, the highest level ever recorded worldwide. Thus, rising military expenditure is contributing significantly to the growth of artificial intelligence in the modern warfare market.

Major players in the artificial intelligence in modern warfare market are placing a strategic focus on introducing next-generation solutions, including advanced AI and computer vision capabilities, to meet evolving customer needs. The integration of AI and computer vision technologies empowers machines to process and analyze visual information, enabling intelligent decision-making. In March 2023, Red Cat Holdings Inc., a US-based aircraft company, and Athena AI, a UK-based multi-channel communication platform, jointly launched the Teal 2 military drone. Designed for military applications, especially short-range reconnaissance missions, the Teal 2 features a dual-axis electro-optic (EO) and infrared (IR) gimbal system, providing users with valuable data during nighttime operations through its enhanced computer vision capabilities.

In September 2024, BAE Systems plc, a UK-based aerospace firm, acquired Kirintec Limited for an undisclosed sum. This acquisition is intended to bolster BAE Systems plc's capabilities in electronic warfare, countermeasures, and defense technology by incorporating Kirintec Limited's specialized knowledge in electronic countermeasures, explosive ordnance disposal, and intelligence solutions, thereby reinforcing its position in modern warfare solutions. Kirintec Limited is a UK-based company that focuses on advanced artificial intelligence technology solutions for defense and security applications.

Major companies operating in the artificial intelligence in modern warfare market are Microsoft Corporation; Raytheon Technologies Corporation; Boeing Co.; Lockheed Martin Corporation; International Business Machines Corporation; General Dynamics Corporation; Northrop Grumman Corporation; BAE Systems plc; Thales Group; L3Harris Technologies Inc.; Leonardo S.p.A; Textron Inc.; Booz Allen Hamilton Holding Corporation; Science Applications International Corporation Inc.; Rheinmetall AG; CACI International Inc.; Elbit Systems Ltd.; Rafael Advanced Defense Systems Limited; General Atomics Aeronautical Systems Inc.; Qinetiq Ltd.; Palantir Technologies Inc.; Teledyne FLIR LLC; Shield AI Inc.; SparkCognition Inc.; Roboteam Inc.; Stryke Industries LLC.

North America was the largest region in the artificial intelligence in the modern warfare market in 2025. The regions covered in the artificial intelligence in modern warfare market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the artificial intelligence in modern warfare market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Tariffs have influenced the artificial intelligence in modern warfare market by increasing costs of imported electronics, sensors, semiconductors, and defense-grade computing systems. These impacts are most evident for autonomous vehicles, surveillance platforms, and combat systems. Regions with high defense procurement such as north america and europe are more affected. Tariffs have also encouraged domestic defense manufacturing and localized supply chains. This has strengthened national security capabilities and long-term defense innovation.

The artificial intelligence in modern warfare market research report is one of a series of new reports that provides artificial intelligence in modern warfare market statistics, including artificial intelligence in modern warfare industry global market size, regional shares, competitors with a artificial intelligence in modern warfare market share, detailed artificial intelligence in modern warfare market segments, market trends and opportunities, and any further data you may need to thrive in the artificial intelligence in modern warfare industry. This artificial intelligence in modern warfare market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

Artificial intelligence (AI) in modern warfare involves the development and deployment of various technologies that leverage AI to enhance accuracy and safety in military operations. This includes enabling autonomous decision-making, improving intelligence collection, and enhancing capabilities in surveillance, targeting, logistics, and cybersecurity. The goal is to create and use AI-driven machines and systems to support human military troops, thereby improving overall effectiveness and efficiency on the battlefield.

The main types of AI in the modern warfare include weaponized AI, defensive AI, offensive AI, assisting AI, and autonomous AI. Weaponized AI involves using AI to develop or enhance military capabilities, often for autonomous or semi-autonomous systems capable of engaging in combat. Various types of equipment fall under this category, including unmanned aerial vehicles, unmanned ground vehicles, combat systems, recovery and maintenance vehicles, reconnaissance and surveillance vehicles, and medical evacuation vehicles. These applications span tactical defensive and military offensive operations.

The artificial intelligence in the modern warfare market consists of revenues earned by entities by providing services such as data analysis, predictive maintenance, cybersecurity solutions, and logistics and supply chain management. The market value includes the value of related goods sold by the service provider or included within the service offering. The artificial intelligence in the modern warfare market also includes sales of AI-enabled targeting systems, autonomous drones, autonomous weapons, sensor network, edge computing device, and cybersecurity hardware. Values in this market are ‘factory gate’ values, that is, the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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