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What are the tactical, operational and strategic implications of the emergence of artificial intelligence (AI), machine learning (ML) and big data? Key actors and observers are all fretting as, allegedly, this wave of technological change will either affect the distribution of power around the world or increase the frequency and intensity of conflict. Anxious that their economic and security systems will be unprepared for future challenges, policymakers are thus rushing to draft new AI policies and strategies. Most analyses, however, lack a rigorous analytical framework to address and understand these issues. Drawing from the literature in economics, management and security studies, we address this problem.We reach three main findings. First, the strategic implications of AI will depend on the nature of its underlying technology. If AI is a general-purpose technology, as many maintain, it will benefit all countries. Conversely, for AI to yield strategic effects significant investments will be necessary. Either way, rapid shifts in the balance of power are unlikely. Second, military technology evolves slowly as it faces the constant evolution of counter-measures, tactics and innovations. AI is unlikely to differ. As a result, sudden changes in the tactical and operational balance will not materialize easily. Third, labor and capital are not perfect substitutes as they also complement each other. As a result, capital-intensive technological change will also call for more skilled labor force. This means, human and organizational dynamics are going to be more, not less, important both in employing military capabilities and in devising innovation.