Artificial Intelligence, or AI, has leapt from the shadows to become an integral part of our daily lives. Remember when DeepMind’s AlphaGo bested a world champion at Go back in 2016? While that was a groundbreaking moment, it didn’t drastically change the way we interacted with technology. Fast forward to today, and the landscape has shifted dramatically thanks to generative AI. Tools like OpenAI’s ChatGPT and image creators such as Stable Diffusion have made AI’s capabilities not just powerful but also easily accessible and visually enthralling to everyday users. These applications can generate complex outputs and tackle challenges that were once thought to be strictly human domains.
Image source: Getty Images.
This shift goes beyond mere technological advancement; it signifies a monumental change in our economies. A recent study by McKinsey & Co. suggests that generative AI could unlock an astonishing annual economic value of between $2.6 trillion and $4.4 trillion across various industries in the coming decades.
For those who want to ride the wave of this transformation, two specific AI-focused defense stocks are catching investors’ eyes for their immense growth potential. Let’s dive into why they’re considered standout options.
A Leader in National Security: BigBear.ai
BigBear.ai (BBAI -20.48%) is making waves in the defense arena with its advanced AI decision intelligence capabilities. The company recently made a strategic move by acquiring Pangiam, a leader in vision AI, enhancing its strengths in facial recognition and biometrics—critical tools in modern security operations.
One of BigBear.ai’s compelling advantages is its leadership, particularly its new CEO Kevin McAleenan, who previously served as Acting Secretary of Homeland Security. His expertise in national security adds valuable insight to the company’s direction.
As part of its commitment to AI in defense, BigBear.ai will implement its AI orchestration platform, ConductorOS, during Exercise Talisman Sabre 2025 in Australia. This platform is designed to improve real-time military decision-making, positioning BigBear.ai at the forefront of AI-driven defense innovations. With the global military push for AI integration ramping up, this company is poised to play a pivotal role in the evolution of autonomous defense systems.
A Pioneering Force in Intelligent Software: Palantir Technologies
Palantir Technologies (PLTR 5.53%) is another key player making significant strides in the AI revolution. Their platforms are designed for optimized decision-making across governmental and corporate sectors. In the company’s Q4 2024, U.S. revenue experienced a whopping 52% year-over-year increase, climbing to $558 million, while commercial revenue surged 64% to $214 million.
What sets Palantir apart is its core “ontology framework” that reveals hidden data connections, enabling more sophisticated decision-making processes. The company operates through two primary channels: the government-focused Gotham platform and the commercial-centric Foundry platform. Notably, the launch of Palantir’s Artificial Intelligence Platform in 2023 allows even non-technical users to leverage large language models, enhancing the utility of Palantir’s technology.
Their innovative approach has resulted in substantial growth, with U.S. government revenue rising 45% to $343 million in Q4 2024, along with a remarkable 73% increase in U.S. commercial customers driven by their unique sales strategy. CEO Alexander Karp has emphasized that “a software juggernaut has indeed emerged.” Palantir’s strong performances and strategic positioning make it an attractive long-term investment opportunity in the AI space.
Two AI Stocks Worth Buying and Holding Long Term
For investors eager to venture into the AI landscape, both BigBear.ai and Palantir Technologies present excellent opportunities packed with value and growth potential. With their specialization, proven capabilities, and widening market opportunities, these stocks are ideal candidates for long-term investment in our increasingly AI-centric world. As AI integrates deeper into defense and enterprise strategies, these companies will likely reap significant rewards from this monumental shift.
The AI Buzz Hub team is excited to see where these breakthroughs take us. Want to stay in the loop on all things AI? Subscribe to our newsletter or share this article with your fellow enthusiasts.
