AI and National Security: 3 Stocks Keeping You Safe (and Profitable)
Artificial intelligence (AI) stocks are likely to become even stronger potential investments as AI has begun playing a significant role in cybersecurity. AI allows professionals to quickly and accurately analyze huge amounts of data. This was exemplified by retired U.S. Army General Stanley McChrystal’s company predicting Russian’s 2022 evasion of the Ukraine with the usage of AI. However, Washington’s experts were totally caught by surprise by the development.
AI is also being used to quickly detect cyber attacks against targets with high national security value and to determine where and when terrorist attacks will likely be launched. Of course, all of these capabilities are extremely valuable to the U.S. and to all governments. Consequently, countries will be willing to pay a great deal for AI that can be used to protect national security. As a result, the companies that provide such AI are likely to generate strong financial results. With that said, here are three AI stocks that should get a lift from the trend of governments using AI to protect national security.
Booz Allen Hamilton (BAH)
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Booz Allen Hamilton (NYSE:BAH), which specializes in helping Washington agencies utilize IT, is heavily involved with AI. The company researches and creates AI infrastructure, and provides these products and information to both the Pentagon and the DOD. Additionally, BAH is directly helping the Pentagon develop AI capabilities. Seeking Alpha columnist Welbeck Ash Research asserted that AI’s proliferation would enable the company’s consulting business to rapidly expand.
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Booz Allen’s AI capabilities are also well-positioned to aid Washington’s efforts to support Ukraine and other countries in Eastern Europe. The capabilities can also aid in America’s efforts to deter China from conducting military activities in the Pacific region. For example, the company was recently awarded a large deal worth up to $2.6 billion “to enable the Soldier as a System concept and continuously enhance the warfighter’s ability in all climatic conditions and combat situations.”
Analysts, on average, expect the company’s earnings per share to come in at $5.50 next year from $4.56 in 2022. Given that expected increase, the company’s forward price-earnings ratio of 20.5 is attractive. This makes Booz Allen Hamilton a prime choice in AI stocks.
BlackBerry (BB)
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BlackBerry (NYSE:BB) provides IT security to the NSA, DOD, Department of Justice, Department of Homeland Security and more.
Moreover, BlackBerry’s IT security software product, Continuous Prevention, is AI powered Given these points, BlackBerry is extremely well-positioned to benefit from Washington’s increased utilization of AI to protect national security. Other U.S. customers of BlackBerry include the Navy, the Army Corps of Engineers and the White House Communication Agency.
Washington’s increased utilization of AI may be one reason for the recovery of BlackBerry’s cybersecurity business. Specifically, its cybersecurity billings soared an impressive 37% versus the same period a year earlier.
BB expects to enter the black by the end of the current fiscal year. Additionally, it forecasts a strong compound annual growth rate of 12%-15% in its top line from FY24 to FY27. Moreover, BB expects to generate positive cash flow in FY25.
Palo Alto Networks (PANW)
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Palo Alto Networks (NASDAQ:PANW) has been using AI for seven years and intends to step up its use of the technology. The company is looking to launch a large language model in the coming years to capitalize on AI’s popularity. It is hoping that generative AI may help the firm detect and eliminate threats while making its products more accessible.
Last year, PANW’s federal business received a significant boost when its IoT Security solution received Federal Risk and Authorization Management Program (FedRAMP) Moderate Authorization status. The authorization enables the company to sell its products to more federal agencies that handle classified information.
Earlier this month, Morgan Stanley identified PANW as a company that could use AI to become more efficient and save significant amounts of money.
On the date of publication, Larry Ramer was long BB. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.
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