Directed energy market forecast to triple to $24B as militaries shift from missile interceptors
Bloomberg Intelligence sees the sector growing two to three times from a $6-8B base over the next decade, with the Iran war accelerating procurement timelines.
Bloomberg Intelligence, in research discussed on the Odd Lots podcast, forecasts the directed energy market growing two to three times from a base of $6-8 billion over the next decade, a projection that would put the sector at $12-24 billion by the mid-2030s. The note was laid out in a Bloomberg terminal research piece and discussed on the program, as defense ministries on both sides of the Atlantic push spending on laser and microwave weapons systems.2
The supply-chain logic is what draws the energy sector in. A high-energy laser runs on electricity rather than propellant, shifting the burden from explosive manufacturing to power generation and storage. Militaries evaluating these systems are effectively placing bets on grid infrastructure, mobile power units and battery technology as much as on optics and beam control.2
The market size figures are modest against the broader defense industrial base, but the growth rate is what procurement officials are tracking. A two-to-three-times expansion over ten years would outpace most conventional weapons categories, which typically grow in line with inflation-adjusted budgets. Directed energy is coming off a low base, though, and past forecasts for the sector have repeatedly slipped as beam control and thermal management problems proved harder than expected.2
The operational pull has sharpened recently. ICE Brent crude front-month was trading at $97.75 a barrel as of 15:10 UTC on Tuesday (2026-09-08), down 0.40% on the session, with the US-Iran war sustaining the supply-disruption premium embedded in crude. A Bloomberg Intelligence survey found most oil market participants expect ICE Brent crude front-month to average $81-100 a barrel over the next 12 months, with global supply disruptions running at 3 million to 7 million barrels a day.1,2
The same conflict has demonstrated the cost arithmetic that directed energy vendors cite. Intercepting cheap drone swarms with expensive missiles drains inventories and budgets simultaneously. Each interceptor missile costs hundreds of thousands of dollars; a laser shot costs the electricity to power it, a comparison the US Navy has acted on by installing solid-state lasers on destroyers and the Army by fielding mobile systems. The Bloomberg projection suggests procurement officials are beginning to accept that argument at program-of-record scale.2
But the market forecasts carry a dependency on conflict persistence. The current pricing environment, with ICE Brent crude front-month near $100 and the EIA projecting US crude output to hit a record 14.1 million barrels a day in 2027, reflects an assumption that supply disruptions will continue. Directed energy vendors benefit from the same assumption: sustained threats justify shifting from expendable munitions to reusable energy weapons.1,2
Survey data from Bloomberg Intelligence shows hedging behavior rising, with about a quarter of respondents expecting an increase in risk-management activity versus 15% who see more opportunistic trading. That defensive posture maps onto the directed energy pitch: persistent drone threats and contested supply chains strengthen the military case for lasers precisely because they decouple force projection from logistics.1,2
The electricity consumption angle cuts in a separate direction. Directed energy systems deployed at scale need power generation that can move with the platform, pointing toward the same markets driving the broader electrification trade — gas turbines, battery storage — though the volumes involved remain trivial against utility-scale demand.2
Skeptics note the gap between prototype demonstrations and production contracts. Directed energy programs have a history of successful field tests followed by prolonged integration timelines, and the Pentagon's budget cycles do not always match technology maturity curves. The Bloomberg forecast assumes procurement follows through on current program-of-record plans, a bet that has burned investors in hypersonics and other next-generation weapons categories before.2
Contract awards are the signal that matters more than technology readiness. Directed energy companies tend to re-rate when live-fire intercept tests produce results at a fraction of interceptor costs, and sell off when programs slip. With ICE Brent crude front-month holding near $97.75 a barrel on Tuesday (2026-09-08) and the Iran conflict showing no signs of resolution, the incentives for accelerated deployment are as strong as they have been — but defense budget cycles move on their own calendar, and the next appropriations round will show whether the operational urgency has translated into signed contracts.1,2