What role is AI playing in defence and national security, and what are the implications for allied nations and their businesses?

AI is playing a pivotal role in defense and national security by driving investments in autonomous systems, algorithms, and sensors that are reshaping modern battlefields, as seen in collaborations between entities like Anthropic and the Pentagon [3]. This includes a surge in global spending projected to reach $100 billion by 2028, fueling an AI-driven arms race with risks of conflict, ethical dilemmas, and political disputes over military AI safety and governance [1], [4], [5], [6], [8]. Additionally, defense budgets are supporting AI infrastructure in space, such as orbital datacenters and lunar solar arrays, to scale compute power amid geopolitical competition [9]. For allied nations and their businesses, these developments imply significant economic opportunities, including job creation, revenue growth in the defense sector, and soaring valuations for AI and defense startups, particularly in Europe where venture capital is flowing to bolster security and economic sovereignty [2], [6], [12]. However, they also raise concerns about resource shifts, the need for AI dominance to avoid economic trouble, and proposals for nationalization to address security risks from concentrated private control [7], [10], [11].