AI in Aerospace and Defense Market Size, Share and Trends 2024 to 2034

AI in Aerospace and Defense Market Size and Forecast 2024 to 2034

The global AI in aerospace and defense market size accounted for USD 25.43 billion in 2024 and is expected to exceed USD 65.43 billion by 2034, growing at a CAGR of 9.91% from 2024 to 2034. The AI in aerospace and defense market is growing due to its utilisation to accelerate speed in terms of concept and detailed design phases and enhances the surveillance, security and training in defense sector.

AI in Aerospace and Defense Market Key Takeaways

• North America dominated the AI in aerospace and defense market with the largest market share of 41% in 2023.
• Europe is expected to grow at the fastest CAGR in the market during the forecast period.
• By offering, the hardware segment contributed the biggest share of the market in 2023.
• By offering, the software segment is anticipated to witness significant growth in the market over the studied period.
• By deployment type, the on-premise segment accounted for the highest share of the market in 2023.
• By deployment type, the cloud-based segment is expected to show considerable growth in the market over the forecast period.
• By platform, the airborne segment led the global market in 2023.
• By platform, the space segment is expected to grow at the highest CAGR in the market during the forecast period.
• By technology, the machine learning segment held the largest share of the market in 2023.
• By technology, the computer vision segment is expected to grow at a notable CAGR in the market during the forecast period.
• By application, the surveillance & monitoring segment contributed the highest market share in 2023.
• By application, the navigation & guidance systems segment is expected to expand at the fastest CAGR in the market over the forecast period.
• By end-use, the government & law enforcement segment accounted for the highest market share of 52% in 2023.
• By end-use, the commercial segment is anticipated to grow at a solid CAGR in the market during the projected period.

U.S. AI in Aerospace and Defense Market Size and Growth 2024 to 2034

The U.S. AI in aerospace and defense market size is exhibited at USD 7.82 billion in 2024 and is anticipated to be worth around USD 20.50 billion by 2034, growing at a CAGR of 10.09% from 2024 to 2034.

North America dominated the AI in aerospace and defense market in 2023. The dominance of this region is stimulated by robust investment in both commercial aviation and defense sectors. Companies such as Boeing, Lockheed Martin, and Northrop Grumman are greatly investing in AI to enhance their capabilities in aircraft design, autonomous systems, and military applications. The U.S. government and military are investing highly in AI and demanding the presence of AI on government contracts.

Europe is expected to grow at the fastest CAGR in the AI in aerospace and defense market during the forecast period. The growth in this region is due to Europe's global leadership in the production of civil and military aircraft, helicopters, drones, aero engines, and other systems and equipment.  The large aeronautical enterprises are located in countries such as France, Germany, Italy, and Spain.

• The European Industry of aeronautics provides 405000 jobs, generates Euro 130 billion in revenues, and plays a leading role in exports, amounting to Euro 109 billion.

Market Overview

The concept of artificial intelligence in aerospace and defense represents the adoption of AI systems by companies to speed up their design cycles, which is a crucial phase before the manufacturing and final deployment with air traffic control. AI in aerospace and defense market is implemented in manufacturing and maintenance, which includes factory automation, supply chain streamlining, and processing large data sets to help maintenance engineers.

The application of AI in aerospace and defense market is not a futurist concept. The Department of Defense, the Air Force, and the U.S. Navy are all considering the incorporation of AI in military applications and weapons systems, commencing with cloud initiatives such as DOD Cloud One. AI-powered modeling platforms are essential to designing and developing a new aircraft system quickly, safely, and efficiently.

Data and Statistics in the AI in Aerospace and Defense Market 

• In July 2022, Raksha Mantri Shri Rajnath Singh launched 75 newly developed Artificial Intelligence products and technologies during the ‘AI in Defence’ (AIDef) symposium and exhibition organized by the Ministry of Defence in New Delhi.
• According to the International Air Transport Association, the demand for global air passenger traffic measures in revenue passenger kilometers is expected to grow by 11.6% in 2024 compared to 2023.
• The U.S. Department of Defense increased its fiscal year 2024 budget to USD 842 billion—USD 100 billion more than FY 2022. The focus is on integrating technologies such as AI, automation, and advanced manufacturing into defense systems.
• In November 2024, Odyssey Systems Consulting Group, a leading provider of outstanding management, analytical, and technical support services, won a 5 year USD 531 million contract to provide advisory and assistance service to the U.S. Air Force’s Intelligence, Surveillance, Reconnaissance (ISR) and Special Operations Forces (SOF).

AI in Aerospace and Defense Market Growth Factors

• Factory automation: This helps improve factory operation and supply chains, reduce delays, improve customer experiences, lower costs, and increase productivity.
• Preventative maintenance: The existing application of AI in aerospace engineering is commonly used to track, schedule, and manage maintenance based on historical data and predictive analytics. This predicts and schedules the required parts beforehand.
• User experience: AI has the potential to improve customer interaction by incorporating chatbots to converse with customers, find out the problem, and provide solutions. 
• Fuel efficiency: With the help of historical recorded data as a base, AI optimizes fuel consumption during the most taxing part of the flight. This advanced system has the ability to create custom profiles based on pilots, aircraft, locations, weather, and more.
• Training: The training platform for pilots and engineers is advancing with virtual reality (VR) and augmented reality (AR). AI collects and analyses training data which showcases the pilot’s strengths and weakness to create a detailed report for the trainers.

Market Scope

Market Dynamics

Driver

Technological advancements

The AI in aerospace and defense market has revolutionized the manufacturing process and provided efficiency and productivity. By analyzing larger sensor data from aircraft systems and components, AI algorithms detect anomalies and failure detection and trigger maintenance action before an issue occurs. Predictive maintenance technology helps optimize performance and reduce downtime.

• Swiss International Airlines incorporated AI to boost efficiency and claims it could optimize more than half the flights in its network and save 5 million Swiss francs in 2022.

Additionally, quality control also plays a crucial role by leveraging computer vision and machine learning algorithms, the AI in aerospace and defense market systems rapidly inspect and identify defect in components with great accuracy.

Restraint

Flawed prediction and incorrect decision

Several companies have reported several negative impacts of AI applications in the AI in aerospace and defense market. As AI algorithms solely depend on high-quality and relevant data, and when companies contain inadequate or biased data, the outcome is inaccurate decision-making.

Another issue with the AI in aerospace and defense market is the inability to explain the reasoning behind AI decisions. In safety-critical aerospace applications, explainability and interpretability are crucial aspects to gain user trust. Additionally, growing work efficiency is leading to job displacement. For instance, an analyst at Georgetown University presented an incident where AI mistook atmospheric conditions over Bering Strait as a missile attack and launched missile interceptors, which China then viewed as an attack against them.

• According to the World Economic Forum, 75% of companies are expected to adopt AI technology in the next 5 years, and up to 26 million record-keeping and administrative-related jobs will be eliminated.

Opportunity

Innovation in aerospace and defense using AI

The implementation of the AI in aerospace and defense market services provides a promising future with innovative discoveries. One feature that is expected to be witnessed in the aerospace industry is autonomous space explorations; this feature consists of AI-powered robots that deal with complex tasks in space, paving the way for deeper exploration and colonizing other planets. Personalized air travel features let an individual passenger adjust cabin temperature and pressure according to the desired comfort. Another feature is hypersonic flight, which allows a vehicle to travel at several times the speed of sound. AI helps in developing a safe and efficient hypersonic travel experience.

Moreover, AI in aerospace and defense market has various applications, such as warfare systems, including weapons, sensor navigation, aviation support, and surveillance, which can employ AI to operate much more efficiently. Drone swarms, strategic decision-making, data processing and research, combat simulation and training, threat monitoring, cybersecurity, and transportation are some additional aspects where AI is applicable and is expanding with novel discoveries.

Offering Insights

The hardware segment contributed the biggest share of the AI in aerospace and defense market in 2023. The dominance of this segment is due to its quick processing of large datasets with efficiency and scale. Some commonly used AI hardware components are processors, AI accelerators, and specialized memory units. Each hardware component of artificial intelligence has different aspects. For instance, processor speed directly impacts the AT model calculation performance, and memory and storage affect the quantity of data handled and accessed.

The software segment is anticipated to witness significant growth in the AI in aerospace and defense market over the studied period. The growth is attributed due to rising popularity to install software on aircraft and space vehicles. The manufacturing and system suppliers must meet the strict regulatory requirement standards such as DO-160, DO-178C and DO-254 in aviation. A comprehensive software is required to experience a seamless workflow from model definition to real-time testing.

Deployment Type Insights

The on-premise segment accounted for the highest share of the AI in aerospace and defense market in 2023. The dominance of this segment is noticed as on-premise runs AI services and applications with the organization’s physical environment; it is operated by the organization’s employees, which are an ideal choice for controlling in the aerospace and defense sector. This also allows enhanced security and privacy with customized and controlled applications.

The cloud-based segment is expected to show considerable growth in the AI in aerospace and defense market over the forecast period. Cloud AI allows companies and enterprises to utilize AI’s full potential, such as machine learning, natural language processing, and computer vision. The integration of cloud-based AI offers multiple advantages to the organization, equipping businesses with a competitive edge.

Platform Insights

The airborne segment led the global AI in aerospace and defense market in 2023. Airborne intelligence, surveillance, and reconnaissance offer faster targeting and response for threat identification, security built into the model to detect and prevent tampering, optimizes SWAP management by model compression, increases the capability and payload of drones and other airborne devices, and the data can be offloaded post-mission for data deeper analytics. All these factors contribute to the growth of this segment.

The space segment is expected to grow at the highest CAGR in the AI in aerospace and defense market during the forecast period. The Space Force officials are urging increased investments in AI and machine learning to maintain the country’s dominance in air and space industries. The growth is attributed to AI's transformative advancements in exploration, in-space servicing, command-and-control decision-making, and more resilient communication.

Technology Insights

The machine learning segment held the largest share of the AI in aerospace and defense market in 2023. The dominance of this segment is observed due to its transformative property in the aerospace sector. The application of machine learning is used in aircraft design and optimization, structural health monitoring, flight control, and navigation, satellite image analysis, and space exploration. These advanced contributions of machine learning technology are growing the aerospace and defense industry.

The computer vision segment is expected to grow at a notable CAGR in the AI in aerospace and defense market during the forecast period. The growth of this segment is due to the rising demand to eliminate global threats and boost military capabilities. Computer vision technology offers organizations with large amount of visual data, allowing them to make quick and accurate decisions. In the defense sector, this technology improves operations, safety, and decision-making.

• In February 2024, Schuyler Moore, chief technology officer for the U.S. Central Command discloses the use AI technologies, particularly computer vision to execution of over 85 US air strikes. The strikes targeted 7 facilities in Ira and Syria including rocket, missile storage, drone facilities and militia operation centres.

Application Insights

The surveillance & monitoring segment contributed the highest AI in aerospace and defense market share in 2023. The dominance of the segment is attributed to the growing demand to detect aircraft and send detailed information to the air traffic control system, which allows air traffic controllers to safely guide the aircraft. AI enhanced the efficiency and accuracy of surveillance systems, providing real-time insights and alerts for various applications.

The navigation & guidance systems segment is expected to expand at the fastest CAGR in the AI in aerospace and defense market over the forecast period. The growth of this segment is due to its demand for making the mission successful as it offers smart weapon solutions with low risk at an affordable cost. The navigation guidance systems provide advanced precision guidance for missiles and munitions which are highly accurate, small, and lightweight.

• In September 2024, Advanced Navigation, a small Australian company, signed an agreement with Korean giant Hanwha to provide unique inertial guidance systems for a range of the Asian company’s weapons.

End-use Insights

The government & law enforcement segment accounted for the highest share of the AI in aerospace and defense market in 2023. The rising demand for government & law enforcement is noticed to provide public safety, criminal justice, and security. Artificial intelligence has the ability to collect data from various sources, such as sensors and satellites, and submit a conclusion that helps government & law enforcement to undertake operations or tasks all by themselves.

The commercial segment is anticipated to grow at a solid CAGR in the AI in aerospace and defense market during the projected period. The application of commercial aircraft manufacturing with generative AI is boosting this segment, it offers a easy and effective tailors design for specific operation. 

• In 2023, NASA’s research engineer claims to use commercially available generative AI to design specialized parts called evolved structures. These designs weigh much less than traditional components.

Recent Developments

• In June 2024, Safran, primarily a manufacturer of aircraft parts, acquired Preligens, a leading geospatial artificial intelligence (AI) start-up establishment, for USD 236 million with France’s defense industry. The acquisition is gained with 220 employees and 140 engineers in research and development. Safran aims to add diverse AI capabilities to its product offering and accelerate its digital transformation.
• In April 2024, Officials of the Naval Air Systems Command at Patuxent River Naval Air Station, Md., announced a USD 657.1 million order from Boeing Co. Defense, Space & Security segment in St. Louis Friday for two additional MQ-25 System Demonstration Test Article aircraft -- air vehicles four and five.
• In September 2024, Lockheed Martin and Tata Advanced Systems Limited teamed up to expand their business relationship through the C-130J Super Hercules tactical airlifter. This initiative has taken a significant step in enhancing India’s defense and aerospace capabilities while deepening the United States' strategies.

AI In Aerospace and Defense Market Companies

• The Boeing Company
• Lockheed Martin
• Northrop Grumman Corporation
• RTX Corporation
• Thales Group
• Honeywell International Inc.
• Deutsche Telekom AG
• General Electric Co.
• Indra Sistemas SA
• Intel Corporation
• International Business Machines Corporation
• Iris Automation
• Microsoft Corporation
• NVIDIA Corporation
• Raytheon Technologies Corporation
• SparkCognition Inc.
• Safran

Latest Announcements by Industry Leaders 

• In June 2024, Safran CEO Olivier Andriès shared insights on the group’s future plan, “With multiple applications, it will represent a step-change for the company’s defense and space technology businesses and will also allow the company to deploy AI-enabled digital inspection methods to support and focus on flight safety and quality.”
• In September 2024, Sukaran Singh, chief executive officer and managing director of Tata Advanced Systems, stated, “Collaboration with Lockheed Martin on the C-130J platform proposition for IAF’s MTA project is a milestone for Tata Advanced Systems,”. On that, Rod McLean, vice president and general manager of the Air Mobility and Maritime Missions line of business at Lockheed Martin, responded, “This teaming agreement between Lockheed Martin and Tata Advanced Systems further demonstrates Lockheed Martin's commitment to a self-reliant India and the confidence that exists in our relationships with our partners in India and the Indian industry at large.”

Segments Covered in the Report

By Offering

• Hardware
  • Processors
  • Memory Devices
  • Network Devices
• Software
  • Ai Solutions
  • Ai Platforms
• Services
  • Deployment and Integration
  • Support and Maintenance

By Deployment Type

• Cloud-Based
• On-Premises

By Platform

• Land
• Naval
• Airborne
• Space

By Technology

• Machine Learning
• Natural Learning (NLP)
• Computer Vision
• Context-Aware Computing
• Robotics
• Big Data Analytics

By Application

• Predictive Maintenance
• Surveillance and Monitoring
• Mission Systems
• Cybersecurity
• Data Analytics
• Autonomous Systems
• Navigation and Guidance Systems
• Others

By End-use

• Commercial

By Geography

• North America
• Asia Pacific
• Europe
• Latin America
• Middle East and Africa