The Future of Artificial Intelligence: 10 Predictions for 10 Industries

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9. AeroVironment, Inc. (NASDAQ:AVAV) – Defense Industry

Number of Hedge Fund Holders: 31

Earlier this year, Palmer Luckey, the billionaire founder of Anduril Industries, an American defense technology firm, outlined in an interview to news platform CBS that the defense industry was changing, with AI-led firms transforming the sector into a space where defense products were more important than defense contractors. Per the interview with CBS, for decades, defense contractors had dominated the defense industry. Typically, these companies presented an idea to the Pentagon. If the Pentagon liked it, the government paid for the company to develop it, even if it went over budget or over schedule.

Luckey started Anduril to flip that procurement structure on its head. The difference, he explained, was that contractors were paid to do the work whether or not they succeeded. However, per Luckey, a products company had a very different mindset, where investors commit their own money and time, rather than using taxpayer money for this purpose.

One of the most prominent companies actively integrating AI with defense products is AeroVironment Inc. (NASDAQ:AVAV). It designs, develops, produces, delivers, and supports a portfolio of robotic systems and related services for government agencies and businesses in the United States and internationally. On October 3, BTIG analyst Andre Madrid raised the price target on the stock to $415 from $300 and kept a Buy rating on the shares. The analyst noted that a meeting with the management had highlighted several product lines with the potential to become greater than $1 billion franchises, including Switchblade, Red Dragon, P550, FE-1, and BADGER.

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