Beat Maverick & Disrupt This $875 Billion Sector
Editor’s note: We want to officially introduce you to your newest contributor here at Weiss Ratings Daily, Michael A. Robinson. Technology has been in his DNA since the ‘70s, when his dad was the senior military editor at the world’s leading aviation and aerospace publication. Over the years, Michael has built an amazing track record with triple-digit winners like 316% on Novavax, 372% on Veeva Systems and 563% on Digital Turbine. Today, he’s sharing the latest in AI and Defense technology … and a powerful way to play it.
 |
| By Michael A. Robinson |
Sorry, Maverick, but this time your job really is in jeopardy.
Fact is, the day on which AI takes over for elite fighter pilots is much closer than Hollywood would have us believe.
Of course, I’m talking about the movie “Top Gun: Maverick” that was a hit two summers ago.
For those of you who may have missed it, Maverick, the main character played by Tom Cruise, proves he is clearly the world’s best fighter pilot.
And one of the themes of the movie is that for difficult and daring attack missions, a human is still far better than an AI-piloted plane.
Here’s the thing. That’s more Hollywood than reality. The day that AI takes over for many human fighter pilots is coming faster than screenwriters can keep up with.
And it’s not just me saying this. None other than the Defense Department revealed last month that an AI-piloted X-62A experimental fighter engaged in a dogfight against a human pilot.
In a moment, I will give you more details of this groundbreaking feat set to disrupt the $875 billion defense sector.
But first, let’s talk about all the money up for grabs here …
Defense Spending in AI Exploding
As a sign of the potential, a recent report by the Brookings Institution says federal spending on AI is exploding.
The report found that U.S. military spending on AI jumped 192% in a year. It rose from $190.4 million in the year ended August 2022 to $557.1 million in the year ended last August.
Overall, federal AI spending in the period soared a stunning 1,200% — from $355 million to $4.6 billion, Brookings said.
No wonder privately-held Shield AI is getting so much money from investors.
Last December, the firm expanded its series F financing to $500 million, giving it a pre-IPO value of nearly $2.7 billion.
Then again, Shield AI is a startup at the forefront of using autonomous AI technology to transform how the U.S. military fields its aircraft.
This could be an absolute game changer that could enhance America’s air superiority over the battlefield, making it potentially more lethal than even top gun Maverick himself.
Which explains why Stealth AI is working with major defense firms like Boeing (BA) and Northrop Grumman (NOC) as well as the US Air Force.
The brains behind Shield AI’s advanced platform is known as Hivemind. Similar to a human pilot, Hivemind reads and reacts to the battlefield.
Even better, it does not require GPS for guidance or onboard communications to make decisions.
Instead, the aircraft relies on sensors to create a map, or worldview, of its surroundings and targets. The computer then tells the AI autopilot where to go and what to do to execute its mission.
Now then, the Defense Advanced Research Projects Agency (DARPA), a unit of the Pentagon, didn’t reveal the full extent of Shield AI’s involvement in the AI-human dogfight we talked about a moment ago.
But DARPA trumpeted the overall breakthrough as a “transformational moment in aerospace history.”
In flight, the AI algorithms controlled a specially modified F-16 test aircraft (the X-62A) at the Air Force Test Pilot School at Edwards Air Force Base, California.
DARPA only recently confirmed the test that it carried out last fall, adding that it will continue testing autonomous combat maneuvers through at least this year.
But DARPA is holding one key fact close to its vest. The agency declined to say who was defeated in the dogfight.
This much, however, is clear — either way, savvy investors stand to win.
Buy This to Profit from Defense AI Boom
In a case like this, I believe it can pay to spread out our investments as broadly as possible.
That way it doesn’t matter who has better financial or AI results at any point in time. In the long run, we’ll make money from them all.
That’s why I think investors would do well to take a good look at the Invesco Aerospace & Defense (PPA) ETF. This is a cost-effective portfolio comprised of proven defense and aerospace leaders.
The beauty of this ETF is that it positions you to profit from just about every aspect of the industry. With nearly 50 stocks in its portfolio, PPA includes aircraft makers, component suppliers and electronics firms that are increasingly using AI. Take a look:
- Mercury Systems (MRCY) specializes in making plug-and-play subsystems for large defense contractors like Boeing. It has deep expertise in advanced air-defense gear and supplies products on more than 300 defense programs. The firm says it is optimizing its computer processors to handle AI’s rigorous computing needs.
- Honeywell International (HON) has broad exposure to defense and aerospace as well as the civilian aircraft industry. Honeywell is working with the European Union to test an AI platform that would replace one of two human pilots, which could both improve safety and profit margins.
- Kratos Defense & Security Systems (KTOS) is a small cap provider of communications and radar systems, payload vehicles, rockets and unmanned systems. It’s also involved in the Pentagon’s AI programs. Working in conjunction with Shield AI, it operates the Valkyrie fighter intended to fly alongside modern manned fighter jets.
- Palantir Technologies (PLTR) is a software firm with a wide range of defense contracts. It also gives investors a foray into AI-powered ground vehicles. Its TITAN Army truck works as a ground station node tapping AI to connect Army units to high-altitude and space sensors, which in turn provide precise targeting data to the soldiers.
As you can see, with this one investment we benefit from the entire sector’s growth. That also reduces the risk associated with investing in just one stock at a time when the markets remain volatile.
Thus, I believe PPA is a cost-effective way to invest in virtually every aspect of America’s increasingly AI-powered defense ecosystem.
Best,
Michael A. Robinson
P.S. Now then, you’ve been hearing a lot about AI investments lately. And for good reason.
Fact is, AI is an unstoppable global trend and just may be the best investment opportunity of all time … yes, even bigger than the Internet that has ushered in trillions in wealth.
In just a few days, Weiss Founder Dr. Martin Weiss will reveal AI’s latest game-changing ability. Click here to be on the list.
