IQT’s mission is to identify early-stage technologies that have the potential to enhance the national security of the United States and its allies, meaning we are continuously looking ahead to identify what trends and developments are on the horizon. In this blog post, we share a high-level look at what we think 2026 could have in store for emerging technologies, startups, and venture capital (VC) developed by our technology experts and investors. These trends span the range of capabilities that IQT invests in, from quantum and cyber to artificial intelligence, biotechnology, and space. We break out the trends by maturity level, beginning with nascent developments and building toward those likely to deliver broad, transformative effects over the coming year. 

 
Nascent Technology Trends & Developments 

These trends are newly emerging, but we anticipate they will become more pronounced throughout the year.  

• ‍Advanced Nuclear Startups Race to Demonstrate Technical Progress: In the power and energy space, IQT anticipates that advanced nuclear startups – catalyzed by AI demand, government initiatives, and massive VC investment – will begin inaugural demonstrations of small modular reactors (SMRs) and microreactors to solidify their pathway to commercial deployment later in the decade. Eventually SMRs and microreactors could serve as sources of clean, power-dense baseload generation in the race to deliver more powerful AI models. These novel reactors could also enhance the energy resilience of defense users in remote, contested, or otherwise austere environments and reduce reliance on electric grids.
• ‍Quantum Sensing Solutions Move to Testing and Early Deployments: As quantum sensing continues to mature, some quantum position, navigation, and timing (PNT) solutions – which include atomic clocks, magnetometers, and quantum inertial sensors – will undergo testing and initial prototype trials in 2026, with a small number of systems potentially operationally deployed. Quantum-enabled PNT sensors complement traditional PNT technologies and serve as backups when global navigation satellite systems (GNSS) are denied, jammed, or spoofed. Quantum radio frequency (RF) sensors, which encompass technologies that use quantum-enabled devices to detect, measure, and characterize RF fields, will also see incremental advancements this year. Unlike traditional antennas tuned to specific frequency bands, quantum RF sensors can detect signals across a wide range and emit minimal electromagnetic signatures, making them well suited for electronic intelligence missions. 

 
Accelerating Technology Trends & Developments 

Although these may have already existed in 2025, we anticipate they will continue to pick up momentum throughout the year.  

• ‍AI-Enabled Electronic Design Automation Tools Lower the Barrier for Chip Design: In the coming year, the commercial adoption of AI-enabled electronic design automation (EDA) tools for supporting, optimizing, and verifying chip designs will make advanced chip development capabilities more accessible by lowering the expertise required to design chips and shortening design and prototyping timelines. However, tools that fully address complex semiconductor physics, such as tools that independently map functional designs into physical layouts, will not likely emerge until at least 2028. Additionally, China will try to use AI-enabled EDA tools to alleviate its dependence on Western capabilities for advanced node designs.  ‍
• VC Investment and Startup Activity in Transmission and Distribution Accelerate: Given grid bottlenecks, supply chain vulnerabilities, and data center operator interest, startups developing electricity transmission and distribution technologies will attract greater VC funding and make tangible infrastructure deployments to data centers and utility grids in the coming year. This activity will build on initial momentum from startups in an area that has not typically attracted significant venture investment relative to other aspects of power and energy. Greater innovation and investment in grid technology will help modernize a critical infrastructure system that suffers from aging equipment, struggles to incorporate supply from intermittent sources, and has difficulty meeting new user demand, such as for AI data centers.  ‍
• Low-Data Rate Options for Internet-of-Things Device Tracking Become Available: Advances in low-power, low-bandwidth satellite connectivity solutions using Bluetooth and long-range, wide-area networks will enable lower-cost, wider-coverage connectivity for internet-of-things (IoT) and other use cases that do not require high power or high throughput. As satellite-based asset tracking becomes commercially available, it will enable greater real-time supply chain visibility, easier monitoring of remote infrastructure like borders and pipelines, as well as low-power communication in remote or austere environments.‍
• China Will Continue to be a Global Hub for Innovation and Biomanufacturing at Scale, Highlighting U.S. Biotech Startups’ Dependence on China: In 2026, competition between the United States and China will intensify over which country will control the critical infrastructure, data, and supply chains of the global biomanufacturing ecosystem. China continues to execute a state-directed, whole of nation strategy that couples large-scale industrial policy, subsidized capital, and regulatory flexibility to pull biomanufacturing, clinical trials, and pharmaceutical production into its domestic ecosystem. This could allow China to wield its leverage over the biomanufacturing supply chain in a similar manner as it has over access to rare-earth elements. While the United States still leads in early-stage innovation and biotechnology research, deep commercial interdependence means that most U.S. biotech firms rely on China-based manufacturers for at least part of their processes.‍
• European Space Sovereignty Ambitions will Expand, Reflected in Both Policy and Funding: In Europe, this year will be focused on expanding space sovereignty ambitions, signaled by ongoing efforts around the European Space Act draft legislation, launch infrastructure modernization, and Germany’s €35 billion ($41.2 billion) space defense investment strategy. These efforts will help bolster the region’s commercial space industry through regulatory protections, increased access to launch capacity, and boosting demand for European-made space capabilities.  

 
Transforming Technology Trends & Developments  

These trends may have already had a significant impact on strategic technologies, but we expect them to evolve or continue to expand in the coming year.  

• ‍Research to Improve Model Training Intensifies: Unsurprisingly, AI will continue to be a key area for new developments. AI labs will invest significantly in new model training techniques including new reinforcement learning approaches and increasingly complex combinations of pre-, mid-, and post-training to enable models to autonomously complete tasks previously done by humans. New training paradigms may include systems that allow models to work with information beyond their initial training data or learn how to plan, spawn, and manage multiple AI agents, both without wholesale retraining. These changes would allow AI systems to improve their ability to utilize AI's ability to rapidly scale and better leverage agentic tools to complete complex and valuable tasks.  ‍
• Agentic AI Increasingly Leveraged for Cybersecurity Operations: Areas where AI crosses over into other strategic technology sectors will also see critical progress. Agentic AI for cybersecurity operations will become increasingly prominent, driven by advances in AI. While agents are bolstering cybersecurity teams, IQT also anticipates that offensive cyber actors, including state sponsored ones, will increasingly use agents to create infrastructure, scan networks, and generate malware. This means that cyberattacks will be much faster, larger in scale, and executed by less sophisticated operators than ever before.  ‍
• Demand for Offensive Cyber Capabilities Expanding: Similarly, demand for offensive cyber capabilities will expand as defenders and attackers alike adopt AI-enhanced cyber tools. Companies will increasingly deploy commercially available offensive cyber tools – such as those that conduct red teaming and penetration testing – to conduct defensive cybersecurity assessments, shifting away from relying on external service providers for these evaluations. This adoption will be particularly important as nefarious cyber actors turn to AI to orchestrate cyberattacks, lowering the technical bar for attackers and expanding the cyber threat landscape.
• ‍AI-Native Platforms Will Play a Significant Role in Drug Discovery and Development: Finally, AI-native biotech platforms will continue to transform the drug discovery and development process by making research and development more data centric, automating hypothesis generation, and significantly compressing early discovery timelines and costs through virtual screening and virtual simulation optimization. These capabilities make disruptive life sciences innovations more likely than ever before, given their ability to accelerate discovery timelines and reduce research and development costs. IQT anticipates that in 2026, AI-native companies that offer automated or virtual labs to compress the full research and development cycle will likely attract significant investor attention. 

What’s Ahead for IQT in 2026? 

In the year ahead, IQT will not only be watching to see how these trends develop, but we will be actively identifying, funding, and supporting startups that move them forward. Investing in these types of companies will be critical for ensuring that the United States and our allies advance our national security capabilities and stay ahead of emerging threats. This mission is particularly critical in an environment of intensifying competition with China across all technology areas, including in AI, semiconductors, and biotechnology. The latest draft of the country’s 15th five-year plan emphasizes its goals of dominating strategic technologies like AI, robotics, and quantum – making investing in the U.S. and allied national interest all the more vital.