How AI Is Powering the Next Generation of Drones: Market Insights 2025–2032

The AI in drone market was valued at USD 12.5 billion in 2024, and it is projected to grow at a CAGR of 15.2% during 2025–2032, reaching USD 38.4 billion by 2032.

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This strong growth is fueled by technological advancements in UAVs, supportive government initiatives, and rising defense and security investments.

Government schemes such as Drone Shakti and the Production Linked Incentive (PLI) program are catalyzing local manufacturing and easing drone operations across India. Globally, rising security concerns—such as illegal surveillance, aerial intrusions, and targeted attacks—have intensified defense departments’ focus on AI-enabled counter-drone systems.

Global spending on military drones stood at USD 16.5 billion in 2024 and is expected to reach USD 43.7 billion by 2032, highlighting the rising strategic importance of unmanned aerial vehicles in military applications.

Emerging Trends & Growth Drivers

Expansion of BVLOS Operations and Airspace Integration

One of the most transformative trends in the market is the adoption of Beyond Visual Line of Sight (BVLOS) operations. Governments in the U.S., U.K., India, and Canada are revising drone policies to promote BVLOS applications across various sectors.

• The FAA in the U.S. has mandated Remote ID for drones and is set to establish comprehensive BVLOS guidelines by 2026.
• AI technologies enable drones to autonomously avoid obstacles, detect aircraft, and modify flight paths in real-time, improving safety and efficiency.

AI-integrated BVLOS systems are increasingly deployed in smart farming, emergency response, and infrastructure assessment, paving the way for large-scale autonomous drone operations.

Rising Adoption in Industrial Automation and Smart Infrastructure Projects

AI-powered drones are transforming industrial automation and infrastructure modernization efforts worldwide.
Initiatives such as China’s Belt and Road, India’s Gati Shakti, and the U.A.E.’s Smart Dubai rely heavily on AI-enabled UAVs for urban planning, asset monitoring, and digital mapping.

• In India, AI drones have cut infrastructure monitoring costs by 40%.
• Italy’s Entel uses drone-in-a-box systems for automated asset assessment at the Torrevaldaliga Nord power plant.
• In Australia, RocketDNA completed 8,000 autonomous flights at Rio Tinto’s Gudai-Darri iron ore mine in 2024, showcasing large-scale AI-based drone deployment for continuous monitoring.

Market Segmentation Analysis

By Type

• Station-Based (Larger Category, 80% share in 2024)
  These “drone-in-a-box” solutions enable autonomous flight cycles with minimal human intervention, ideal for defense and continuous monitoring applications.
• Cloud-Based (Faster-Growing Category)
  Supported by 5G networks and AI cloud platforms, these drones are used in farming, delivery, and smart city operations. Ukraine’s military employs them for combat monitoring and strategic coverage.

By Component

• Hardware (Largest Category, 75% share in 2024)
  Comprising sensors, cameras, and navigation systems, hardware drives detection and surveillance capabilities.
  Innovations like GAP 9 shield modules and infrared and LiDAR imaging enable night vision, heat detection, and 3D mapping.
• Software (Fastest-Growing Category)
  Driven by AI algorithm advancements for image analysis, navigation, and route optimization, along with frequent updates that enhance drone intelligence and autonomy.

By Technology

• AI-Based Imaging (Largest Category, 70% share in 2024)
  Used for infrastructure and environmental surveillance, leveraging thermal imaging and LiDAR mapping for safety and precision.
• AI-Based Data Analysis (Fastest-Growing Category)
  Supports data interpretation for urban planning and decision-making, managing the vast information generated by drones.

By Application

• Security and Surveillance (Largest Category, 60% share in 2024)
  AI-powered drones with facial recognition and night-vision systems are vital for law enforcement, military intelligence, and critical infrastructure monitoring.
• Logistics (Fastest-Growing Category)
  Demand for contactless delivery in e-commerce, healthcare, and retail sectors is fueling adoption.
  The U.S. Navy and Marine Corps recently ordered 200 T150/TRV150 cargo drones for autonomous resupply missions.

By End Use

• Military (Largest Category, 65% share in 2024)
  Extensively used for reconnaissance, surveillance, and precision strikes, AI drones enhance battlefield intelligence and decision-making.
• Commercial (Fastest-Growing Category)
  Increasingly adopted in urban planning, traffic monitoring, disaster management, and media production, AI drones reduce operational costs and improve efficiency.

Regional Market Insights

North America (Largest Regional Market, 40% share in 2024)

• Strong government backing and FAA regulations encourage innovation.
• Companies such as Skydio lead the market with AI-enabled drones for delivery and monitoring.
• In Canada, drones are widely used in mining and wildlife monitoring, while U.S. farmers employ them for real-time crop and irrigation analysis.

Asia-Pacific (Fastest-Growing Regional Market)

• High investments in military and commercial drones across China and India.
• Drones are essential for smart city development, e-commerce logistics, and disaster management.
• India’s military drone sales are projected to grow from USD 1,550.2 million in 2024 to USD 5,574.6 million by 2032.
• Governments offer subsidies to farmers for purchasing AI drones for crop monitoring and spraying.

Other Regions

• Europe: Germany leads the region, with France being the fastest-growing market.
• Latin America: Brazil dominates, while Mexico records the fastest expansion.
• Middle East & Africa: The U.A.E. leads with AI-based drone initiatives; Saudi Arabia grows fastest, driven by national security modernization.

Competitive Landscape

The market remains moderately consolidated, with major players including:

• NVIDIA Corporation
• Intel Corporation
• Qualcomm Incorporated
• SZ DJI Technology Co., Ltd.
• Skydio, Inc.
• Ambarella, Inc.
• IBM Corporation
• Teledyne FLIR LLC
• Parrot Drones SAS
• Autel Robotics Co., Ltd.
• Skycatch, Inc.
• CEVA, Inc.

Government restrictions and strict safety standards limit new entrants, as most drones are specialized and used by defense and government sectors.

Recent Market Developments

• June 2025: Skydio Inc. launched Skydio X10, integrating smart navigation and FLIR thermal imaging.
• June 2025: NVIDIA Corporation joined a 42-member EU consortium with Nokia, Safran, and Saab to develop AI-powered infrastructure drones.
• February 2025: NVIDIA partnered with Foresight Autonomous Holdings to integrate Jetson Orin AI modules for night vision and energy-efficient flight.
• July 2023: Qualcomm Incorporated acquired Auterion to enhance AI drone delivery and mapping capabilities.

Conclusion

The AI in drone market is entering a new phase of intelligence, automation, and regulatory support. With a projected value of USD 38.4 billion by 2032, driven by BVLOS integration, smart infrastructure projects, and defense modernization, the sector is poised to redefine aerial intelligence and automation across industries.