Precision-Guided Munitions Market 2026 Forecast

Growth is not expected to be even across the category. MarketsandMarkets projects loitering munitions to grow at the highest rate of any product segment over its forecast period, and, within guided ammunition, guided artillery shells to grow fastest. SNS Insider attributes the market's growth to increasing military expenditure, advances in missile defence systems and developments in guidance technology.

MarketsandMarkets names Northrop Grumman, RTX, General Dynamics, BAE Systems, Lockheed Martin, MBDA, Israel Aerospace Industries, QinetiQ, Boeing and Aselsan among the leading companies. SNS Insider names Lockheed Martin, Raytheon Technologies, Northrop Grumman, BAE Systems and General Dynamics as key players. Of these companies, only Lockheed Martin appears as its own entry on DI's drone market map, which tracks autonomous systems rather than the munitions sector as a whole; Boeing appears through its subsidiary Insitu.

The largest award covered on this page is for Tomahawk. Breaking Defense reported on 17 August 2026 that the US Navy had awarded Raytheon, an RTX subsidiary, a USD 22.9 billion contract to ramp up Tomahawk cruise missile production to 1,000 rounds a year. The contract follows a February framework agreement with the Pentagon. RTX said the increase will take place over a multiyear period but did not give a specific timeline.

The second is for the Army's Precision Strike Missile (PrSM). Defense News reported on 22 September 2026 that the Army had awarded Lockheed Martin a USD 1.2 billion indefinite-delivery, indefinite-quantity contract covering initial production and future orders of PrSM Increment 2. Lockheed Martin said it is expanding capacity to quadruple PrSM production. Tectonic Defense reported that the award follows the Army's request for nearly USD 2 billion to buy more PrSMs in FY27.

Defense News also reported that the US military faces a shortage of strike and air-defence missiles after expending large numbers of them in Iran, and that this reportedly includes PrSM. Our assessment: replenishing those stocks is likely to add to demand.

In Europe, the defence ministers of France, Germany, Italy, Poland, Sweden and the United Kingdom signed a letter of intent on 12 February 2026 committing to develop mechanisms for long-range one-way effectors under the European Long-range Strike Approach (ELSA), according to Defence Industry Europe. ELSA was launched in 2024. The same report lists low-cost capabilities with a range of more than 500 km, based on one-way-attack effectors, among the ELSA areas now mature enough for new European partners to join. No production contract under the letter of intent is described in that report.

PrSM Increment 2 is one public example of where guidance is heading. According to Defense News, it has a multimode seeker that can lock on to moving targets on land and hit ships moving at sea, giving land-based launchers a maritime strike capability. Lockheed Martin said, as quoted by Defense News in September 2026, that Increment 2 completed its first flight test in March and its second in August.

At the market level, SNS Insider puts GPS guidance at approximately 31 per cent of the market by technology, the largest of its technology segments, alongside laser guidance, infrared and radar homing. MarketsandMarkets expects guided artillery shells to be the fastest-growing part of guided ammunition.

In the United States, defence articles are controlled under the International Traffic in Arms Regulations (ITAR) through the US Munitions List (USML). A State Department targeted revision of the USML took effect on 15 September 2025. According to the final rule, it removes from the USML items that no longer warrant inclusion, adds items that do, and clarifies certain entries. Compliance firm CVG Strategy expects items removed from the USML to be picked up by the Commerce Department's Bureau of Industry and Security.