Bureaucratic tasks that play a large role for defense companies, as they mostly deal with governments and state actors, can also be dealt with more easily and efficiently thanks to the help of AI.

IBM (NASDAQ: IBM) works with many defense companies as an infrastructure provider in the AI realm. Its Red Hat unit, for example, provides cloud computing services that work in classified environments, which is important for highly critical tasks, such as developing advanced weapon systems.

IBM’s AI offering Watson is also used for tasks such as analyzing military logistics and inventory management in order to optimize them, make them more resilient, and so on.

Artificial intelligence also plays a large role in cybersecurity, which has become a major theme in the defense industry. Not only do defense companies fear that potential adversaries steal secret information about system capabilities, weapon specifications, and so on, but weapon systems themselves have to be hardened against potential hacking, tracking, and so on. Here, IBM’s cybersecurity offerings come into play, such as Guardium, where AI is used to monitor potential threats.

Militaries also use AI in training environments, in war games, planning, and so on. Here, AI technologies help with more realistic and in-depth simulations that empower personnel to be more efficient while leaders can make better decisions.

Defense companies, like RTX (NYSE: RTX) and Northrop Grumman (NYSE: NOC), are deploying AI across the weapon systems they design and manufacture. AI can help with target identification, target tracking, etc. using technologies like computer vision.

This adds an ethical question – weapons systems have to be monitored by and controlled by humans. Machines shouldn’t make major decisions themselves. Safeguards make sure that AI remains in a “helper” role and isn’t in full control of entire weapon systems.

The Stocks to Watch Now

There are many defense companies investors can invest in, such as the aforementioned RTX, while LMT or Boeing (NYSE: BA) are important players in this industry as well. Thanks to growing defense budgets across many NATO members, their growth outlook is very solid. They often don’t have an AI focus, however, they’re still manufacturing-heavy.

For investors that want to focus more on the AI facet in the defense industry, investing in the “AI enablers” could be interesting as well. Tech companies, such as IBM, allow defense companies to utilize advanced AI technologies that these defense companies can’t develop themselves. NVIDIA (NASDAQ: NVDA) is another beneficiary: Advanced algorithms, e.g. for cybersecurity or encryption/decryption, need to be trained, and that oftentimes means that NVIDIA’s chips are running in data centers.

Investors can also choose among our top Artificial Intelligence picks to benefit from increased Artificial Intelligence usage in the defense industry, as well as from general growth in the world of Artificial Intelligence.