The global AI race and defense’s new frontier

Navigating the AI revolution in defense

As artificial intelligence (AI) rapidly advances, its transformative impact on industries worldwide is undeniable, and the defense sector is no exception. Unlike past technological shifts, AI is not merely a tool but a catalyst for entirely new paradigms. Its applications go beyond enhancing operational efficiency, offering capabilities that fundamentally redefine mission effectiveness, speed, precision, and the scale of military operations.

This report delves into AI's transformative potential in defense, exploring its influence on military capabilities and assessing the emerging race for AI dominance. It showcases the diverse applications of AI, from predictive analytics and autonomous systems to robust cyber defense and intelligence-gathering.

These innovations are poised to become central to maintaining military superiority in an increasingly complex and interconnected global environment. The report also addresses the critical ethical and operational challenges that accompany AI's development and adoption, emphasizing the need for responsible AI practices in defense as a foundation for global legitimacy and trust.

Register here to download the study

AI as an exponential driver of military capabilities

Modern militaries operate within an environment of unprecedented complexity, where the volume of available data, the speed of technological change, and the sophistication of adversarial strategies continue to grow at an exponential rate. Traditional decision-making processes, often constrained by human cognitive limits, struggle to keep pace with the continuous influx of intelligence reports, sensor feeds, and cyber threat alerts saturating today’s strategic and operational landscapes.

In response to these challenges, artificial intelligence has emerged as a key enabler of next-generation defense capabilities, offering militaries the potential to identify meaningful patterns hidden within massive datasets, anticipate critical logistical demands, and detect hostilities before they materialize. Furthermore, multi-domain operations – integrating land, air, maritime, cyber, and space capabilities – are increasingly reliant on AI to ensure coordinated action across these interconnected arenas. AI-driven solutions promise to enhance the agility and resilience of armed forces as they contend with complex, multi-domain threats.

As highlighted by NATO and other defense organizations, the integration of AI into multi-domain operations represents a transformative shift that amplifies the scope and efficacy of military capabilities across all domains. Failure to integrate risks undermining the full potential of AI in defense, leaving forces vulnerable in environments where dominance is increasingly dictated by technological superiority.

The main potential lies in the synergy created by AI-driven collaboration across military systems, which holds the promise of securing battlefield superiority. The following areas highlight where AI is making remarkable strides, providing immediate and tangible benefits to defense stakeholders through demonstrable progress and operational maturity:

Global ambitions and the race for AI leadership

With the vast potential of AI in defense and its current applications on the battlefield, understanding who leads in the global AI defense race is crucial. In today's multi-polar and crisis-laden environment, gaining insight into the strategic priorities, technological advancements, and competitive dynamics is essential for shaping the future of military capabilities worldwide. Below are key factors that determine a country's position in this high-stakes race:

1.
AI-readiness: This factor encompasses the technological maturity and sophistication of AI technologies that have been developed and deployed. It also includes the integration of AI into military doctrine, highlighting the extent to which AI has been infused into defense strategies and combat operations.
2.
Strategic autonomy: This refers to a nation's ability to independently develop and deploy AI technologies without relying on foreign suppliers. It also considers the scale and focus of investments in AI research, particularly in defense-specific applications.
3.
Ethics and governance: This aspect involves balancing the drive for innovation with ethical considerations and global norms, ensuring that AI development aligns with responsible practices.

Vision and impacts of AI-driven defense

The integration of AI into defense systems is revolutionizing military operations, paving the way for a future marked by enhanced efficiency, precision, and adaptability. By 2030, AI technologies are anticipated to play a crucial role in reshaping how defense organizations manage resources, make decisions, and execute complex missions across various domains. From optimizing supply chains and automating battlefield operations to empowering decision-makers with predictive insights, AI is set to become an indispensable force multiplier. These are the key areas where AI's impact will be most transformative:

Rapid and effective decision-making has always been a cornerstone of military success, distinguishing leaders and forces in high-stakes operations. By 2030, AI is expected to revolutionize this critical capability, enhancing situational awareness, accelerating decision-making processes, and improving the precision of strategic choices. The VUCA framework – Volatility, Uncertainty, Complexity, and Ambiguity – captures the unique challenges of military environments, and AI is rapidly becoming a transformative tool for addressing these challenges.

The defense sector is on the verge of a paradigm shift in how autonomous systems collaborate across domains. While autonomous systems are already operational and continuously advancing, the next decade will focus on their seamless integration and coordination across multiple domains. This transformation will enable synchronized operations that leverage the strengths of various systems in a cohesive manner.

By 2030, dynamic resource management powered by AI is set to revolutionize defense logistics and operational efficiency. AI-driven logistics systems will transform military supply chains by streamlining inventory management and transportation networks. These systems will optimize the delivery of human and material resources to where they are needed most, ensuring precise supply allocation and reducing delays that could jeopardize mission outcomes.

However, the deployment of AI in defense comes with significant risks and potential conflicts of interest, which could lead to strategic fragmentation and stagnation in AI deployment. Therefore, the utilization of AI must be carefully evaluated and deliberately managed to ensure that its deployment aligns with the core values of democratic norms and systems within the Western alliance.

Vision 2027+: A roadmap for Germany

Germany stands at a critical crossroads in its defense strategy, where integrating AI is not just an option but a necessity. To establish itself as a leader in responsible AI-driven defense, Germany must develop a clear, action-oriented roadmap that addresses its challenges while leveraging its strengths. This vision for 2027 and beyond is built on four key priorities: AI sovereignty, NATO and EU interoperability, fostering innovation ecosystems, and leadership in ethical AI governance.

Achieving these goals will involve a phased approach. Between now and 2027, Germany's focus should be on creating the right environment for AI integration, testing pilot projects, and scaling successful initiatives to full operational capabilities. By following this roadmap, Germany can position itself as a leader in responsible AI for defense, aligning operational effectiveness with ethical standards:

Navigating the AI frontier

Artificial intelligence is reshaping the way nations approach defense, strategy, and security in the 21st century. By 2030, the integration of AI technologies in areas such as predictive decision-making, collaborative autonomous systems, and dynamic resource management is set to revolutionize military operations, offering unprecedented precision, agility, and resilience.

To harness AI's full potential while mitigating risks, defense organizations must prioritize the establishment of robust ethical frameworks, transparent accountability mechanisms, and international collaboration. These initiatives will ensure the responsible use of AI and maintain trust and legitimacy in the global security arena.

To continue being a significant military power and a key player in NATO and the EU, Germany must act decisively to address institutional fragmentation, cultural resistance, and underinvestment in talent and infrastructure. By leveraging its world-class research institutions, industrial expertise, and international partnerships, Germany can create an AI defense ecosystem founded on ethical governance and innovation.

Danny Rienecker, Moritz Bergdolt, Kerin Hartmann and Sissel Lucka co-authored this report.

This report was crafted in preparation for the Munich Security Conference 2025 (MSC).

Disclaimer: This report is not an official publication of the MSC. The contents of this paper do not purport to reflect the opinions or views of the MSC and is meant to provide input to and stimulate the debate at the MSC.

Register to download PDF

The global AI race and defense's new frontier