If Artificial Intelligence (AI) is being developed in a financial bubble, and if this bubble bursts, several defense-related trends may be set into motion.
First, defense contractors selling AI products or services may revert to an earlier tendency to re-package AI technologies under more palatable monikers, like “data analytics.”
Second, national defense organizations in the United States and elsewhere may take up the mantle of basic AI research & development suitable for their own ends, capturing the value left in the bubble’s wake.
Finally, defense contractors – facing a smaller pool of available capital to fund AI R&D – would face greater pressure to tailor their offerings to the mitigation of shortcomings in state-of-the-art AI models for specific defense applications.
Dual-Use, Dual-Risk
AI is a dual-use technology; it can be applied to tasks or problems in either commercial or defense domains. The most impactful breakthroughs in AI research & development over the past fifteen-odd years were made by private actors operating within the commercial domain. These breakthroughs have allowed AI to be applied to a wider range of applications. While most of these applications are commercial – meant to increase the productivity of a company’s workforce and, with it, its marginal gains – defense organizations have accelerated existing efforts to identify use-cases for AI models and apply them in compliance with existing or new organizational standards.
Talk of an AI “bubble” naturally intersects with these trends. Indeed, I have written on this topic twice before, first in 2022 and then again in 2023. In October, most investors surveyed by Bank of America believe AI stocks are currently in a bubble.