There are early indications that 2025 will see an investment spree in artificial intelligence (AI) to match the last couple of years, as startups in the US and the UK hit record valuations.

AI technology that can be used for military purposes is drawing significant attention from investors in the US, in anticipation of Donald Trump’s increased spending on defence.

San Diego based startup Shield AI, which specialises in drone and aircraft technology, is one beneficiary of the continuing investment spree in AI technology. According to recent reports, the firm is set to take its valuation to $5 billion, twice its current value, in a new round of fundraising from investors interested in defence technology.

People close to the matter have told the Financial Times the firm “is raising about $200mn from defence and aerospace companies set to include Palantir, Airbus and L3 Harris.”

According to the paper: “The fundraising will boost Shield’s valuation from the $2.8bn it enjoyed a year ago amid a flood of investor appetite for companies likely to benefit from higher federal spending on national security under Donald Trump’s incoming government.”

UK staying in the race

There has been similar good news in the UK, as London-based AI startup Synthesia, which creates video avatars based on humans, announced securing a $2.1 billion valuation.

The new valuation comes after a fresh round of funding of $180m by investors such as US venture capital group NEA, Google Ventures and Accel Partners.

Victor Riparbelli, chief executive of Synthesia, told the FT: “The UK is the only country in the European region right now that has a real shot at becoming a top-three AI superpower.”

However, investments in the UK and Europe are still shy of matching those in the US and China, partly because of more strict regulations that are in place, according to the FT.

Last week, Prime Minister Keir Starmer announced a new plan to “unleash” AI across the UK to start and deliver a decade of renewal. And relaxing regulations around the development of and investment in technology are part of his government’s plans.

Major tech companies will invest £14 billion ($16.95 billion) in the UK’s AI infrastructure, which it is estimated will create more than 13,000 jobs.