Which firms currently hold the largest market share in AI in Defence?

Analysts estimate that Palantir leads U.S. defence AI software, with primes like Lockheed Martin, RTX, Northrop Grumman, and BAE Systems controlling a major share of AI-enabled platform integration. Anduril has emerged as a leader in autonomy and counter‑UAS, expanding its footprint through multi‑year SOCOM programs.

How fast is the AI in Defence market growing and what is the projected size?

Industry reports indicate mid‑teens CAGR as AI permeates C2, ISR, logistics, and training. Global expenditures are expected to surpass $20 billion by the mid‑decade, with continued acceleration as procurement pathways and accreditation mature.

What contracts are driving recent market share changes among leading firms?

High‑impact awards include Palantir’s multi‑year analytics deployments across U.S. services and Anduril’s reported $1 billion SOCOM counter‑UAS integration program. Primes such as Lockheed Martin, RTX, and Northrop Grumman are gaining share through AI upgrades to radars, EW, and mission systems embedded in modernization cycles.

Which technologies are most important for sustaining market leadership?

Autonomy, sensor fusion, and secure AI pipelines are critical, alongside cloud and edge computing that enable model training and inference in contested environments. Partnerships with cloud providers like Microsoft and Google, and AI integration expertise from IBM, help vendors accelerate accreditation and deployment.

What is the regional outlook for AI in Defence adoption?

The U.S. is expected to maintain leadership due to scale and rapid procurement through the CDAO, while Europe is accelerating AI integration via NATO-linked modernization. European primes such as Thales and BAE Systems are poised to grow share as EU and UK programs prioritize AI in air defense, naval combat, and secure comms.

AI in Defence Market Share: Palantir, Lockheed, Anduril Solidify 2025 Leads

The global AI in Defence arena is consolidating around a handful of primes and software specialists. Palantir, Lockheed Martin, and Anduril are expanding share through multi‑year contracts and accelerated deployments, while RTX, Northrop Grumman, and BAE Systems deepen AI integration across platforms.

Published: November 19, 2025 By Marcus Rodriguez Category: AI in Defence

AI in Defence Market Share: Palantir, Lockheed, Anduril Solidify 2025 Leads

Market Share Snapshot: 2025 Competitive Balance

The AI in Defence market is coalescing around a mix of primes and software-first players, with identifiable contract data showing the top vendors capturing a majority of spend. Industry trackers point to global AI-in-defence expenditures that are on pace to surpass $20 billion by the mid‑decade, according to industry analyses. In the United States, the Department of Defense’s AI push through the Chief Digital and Artificial Intelligence Office has accelerated procurement cycles and fielding timelines, as outlined in the Pentagon’s strategy on ai.mil.

By segment, software analytics and decision-support are led by Palantir, which analysts estimate holds roughly 20–25% of identifiable U.S. AI software obligations in FY2023–FY2024, followed by Booz Allen Hamilton in the 10–12% range and cloud-enabled solutions from Microsoft near 8–10%, based on public award data and vendor disclosures. Platform-centric AI integration—spanning avionics, C2, and sensor fusion—remains anchored by primes including Lockheed Martin, RTX, Northrop Grumman, and BAE Systems, which collectively account for an estimated 35–45% of AI-enabled hardware and mission-system awards across NATO markets, as reflected in arms-industry assessments from SIPRI and procurement data summarized by Bloomberg Government.

Leaders by Segment: Software, Autonomy, and Sensors

A distinct split has emerged between software-led firms and platform integrators. In autonomy and counter‑UAS, Anduril has rapidly increased share following a multi‑year U.S. Special Operations Command award reported by Reuters, with layered autonomy and AI-enabled sensing deployed at scale. Emerging players like Shield AI are gaining ground in edge autonomy and AI‑piloting, pushing competition in contested airspace and urban ISR.

On the sensor fusion and mission-systems side, primes such as RTX (Raytheon) and Northrop Grumman are consolidating share through AI upgrades in radars, electronic warfare, and C2 networks that tie into software ecosystems. European leaders including Thales and BAE Systems...

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