OMG – AI is MUCH bigger than even I dreamed !

TheMiddleView

TL:DR

The revenues of todays AI Tech darlings look tiny against the probable government use of AI

This is not financial advice.

Lets just look at how AI could be deployed in government. The US Government today spends approx $100bn on IT (Link: Source Government Accounting Office GAO ).

AI will grow faster than historical due to the migration from legacy Military to AI and including and from human labor to AI. If we assume it grows as fast as Cloud, mobile or eCommerce of non physical goods like travel insurance and banking.

Who wins “massively”?

  • Palantir (AI platform of record for many agencies).
  • Anduril & Shield AI (autonomy in drones/defense).
  • NVIDIA + AWS/Azure (compute backbone).
  • Booz Allen Hamilton (federal AI integrator).
  • Traditional primes (Lockheed, RTX, Northrop) will also capture billions by embedding AI into every next-gen platform.

Historical Growth Of Disruptive Tech

Total Government Spend - Opportunity

DepartmentAddressable Ops/Admin ($B)Notes
Defense (DoD + Intel)~500Largest pool: personnel ($300B+), logistics, C2, ISR analysis, sustainment.
Health & Human Services (HHS)~220Medicare/Medicaid admin, NIH/FDA/CDC ops, claims/fraud detection.
Social Security Administration (SSA)~50Benefits processing, adjudication, fraud/compliance.
Treasury (IRS)~50Tax return processing, audits, fraud detection.
Homeland Security (DHS)~40Border enforcement, TSA, customs, cyber, FEMA.
Veterans Affairs (VA)~30Claims admin, scheduling, health diagnostics.
Justice (DOJ incl. FBI, courts)~20Case review, forensic analysis, investigations.
Energy (DOE/NNSA)~15Grid ops, nuclear monitoring, simulations.
Others (State, DOT, NASA, Education, etc.)~30Diplomatic services, transport safety, space mission planning, grants.

AI Centric Companies Set To Benifit

Anduril – Lattice OS, autonomous drones, counter-UAS, defense AI ecosystem.
Shield AI – Hivemind AI pilot software for aircraft/UAVs, autonomy in GPS-denied environments.
Kratos – Loyal wingman drones, attritable UAVs bridging legacy & autonomy.
Epirus – AI-powered electronic warfare & directed energy counter-drone systems.
HawkEye 360 – AI-driven RF geolocation from satellite constellations.
BigBear.ai – Decision intelligence, predictive logistics, ISR analytics.
These are the companies turning battlefield platforms into software-defined, autonomous systems.
Scale AI – Data pipelines, model evaluation, red-teaming for DoD & intelligence community.
Rebellion Defense – AI for military decision support, C2, and cyber operations.
Primer AI – Natural language AI for intelligence agencies; rapid document/signal analysis.
Cognitive Space – AI-driven satellite tasking & orchestration for ISR missions.
These firms build the AI “brains” for defense — decision support, intel processing, orchestration.
Darktrace – AI-driven anomaly detection, self-learning cyber defense.
Dragos – Industrial/critical infrastructure cybersecurity with AI insights.
Claroty – AI monitoring for OT and healthcare infrastructure security.
As government shifts to AI, protecting the attack surface with AI-native cyber firms is critical.

DOD alone Major Military AI Opportunities (2029 & 2035)

Budget base: ~$70B/year
AI penetration: ~35% by 2029 (~$25B), ~60% by 2035 (~$40–45B)
Drivers: Automated image/video/signal analysis, multi-source fusion, real-time intel feeds.
Budget base: ~$50B/year
AI penetration: ~25% by 2029 (~$12B), ~50% by 2035 (~$25B)
Drivers: Real-time decision support, logistics optimization, mission planning automation.
Budget base: ~$100B+ procurement & O&M
AI penetration: ~20% by 2029 (~$20B), ~40% by 2035 (~$40B+)
Drivers: Drone swarms, unmanned ground/sea vehicles, autonomous satellites.
Budget base: ~$25B/year
AI penetration: ~30% by 2029 (~$8B), ~55% by 2035 (~$14B)
Drivers: Automated cyber defense, offensive cyber, adaptive jamming, spectrum control.
Budget base: ~$40B/year
AI penetration: ~20% by 2029 (~$8B), ~40% by 2035 (~$16B)
Drivers: AI guidance, adaptive targeting, prioritization of high-value targets.
Budget base: ~$80B/year
AI penetration: ~10% by 2029 (~$8B), ~25% by 2035 (~$20B)
Drivers: Predictive maintenance, automated parts supply, readiness forecasting.
Budget base: ~$15B/year
AI penetration: ~20% by 2029 (~$3B), ~40% by 2035 (~$6B)
Drivers: AI adversaries in simulations, adaptive wargames, digital twins.
Budget base: ~$30B/year
AI penetration: ~10% by 2029 (~$3B), ~25% by 2035 (~$7B)
Drivers: Automated triage, diagnostic AI, HR/payroll automation.

Major Military AI Opportunities (2029 & 2035)

Budget base: ~$70B/yr
AI penetration: 2029 ~35% (~$25B), 2035 ~60% (~$40–45B)
Why: Automated image/video/signal analysis; multi-source fusion.

Budget base: ~$50B/yr
AI penetration: 2029 ~25% (~$12B), 2035 ~50% (~$25B)
Why: Decision-support, logistics, real-time battle management.

Budget base: ~$100B+ procurement & O&M
AI penetration: 2029 ~20% (~$20B), 2035 ~40% (~$40B+)
Why: Drone swarms, UUVs, unmanned ground vehicles.

Budget base: ~$25B/yr
AI penetration: 2029 ~30% (~$8B), 2035 ~55% (~$14B)
Why: Automated cyber defense & offense, adaptive jamming.

Budget base: ~$40B/yr
AI penetration: 2029 ~20% (~$8B), 2035 ~40% (~$16B)
Why: AI guidance, adaptive targeting, prioritization.

Budget base: ~$80B/yr
AI penetration: 2029 ~10% (~$8B), 2035 ~25% (~$20B)
Why: Predictive maintenance, parts supply forecasting.

Budget base: ~$15B/yr
AI penetration: 2029 ~20% (~$3B), 2035 ~40% (~$6B)
Why: AI adversaries in sims, adaptive wargames.

Budget base: ~$30B/yr
AI penetration: 2029 ~10% (~$3B), 2035 ~25% (~$7B)
Why: Automated triage, HR/payroll task automation.

Discover more from Priory House

Subscribe to get the latest posts sent to your email.