Insights
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AI in the Defense Industry
Artificial intelligence is in our homes, our workplaces, and our schools. It’s in our entertainment, our transportation, and our communications. And over the past few years, AI has become a critical component in the defense of our country. AI in the defense industry is expected to grow at a Compound Annual Growth Rate (CAGR) of 33.3% from 2023 to 2028.1
To meet the evolving challenges presented by the explosion of AI, the Department of Defense is prioritizing its development and adoption. As companies across industries race for AI dominance, that race takes on a whole new meaning when it comes to defending the nation against threats that are simultaneously expanding their own AI defense capabilities. It might be a minor inconvenience for a chatbot to produce a wrong answer, but inaccurate or unreliable AI technologies can have life or death consequences in the high-stakes defense industry.
Companies specializing in AI technologies with defense use cases are investing heavily in red-teaming, a method for increasing an AI model’s reliability by testing the system’s shortcomings.2 Access to the enabling technologies, like semiconductors (chips), can also present a barrier to AI adoption in the defense industry as many components are manufactured overseas. Supply chains for AI components can themselves pose a threat to national security. Efforts are underway to enhance the U.S. semiconductor production capacity, which is forecast to triple from 2022 to 2032.3
With the necessary precautions and adequate supply in place, AI has many powerful opportunities to transform the defense industry. As so much of national security is fought in cyberspace, AI-powered cybersecurity is perhaps one of the most critical and impactful uses of AI for the defense industry.
The defense industry generates vast quantities of data. Regardless of its specific use-case, AI will allow defense industries to now do far more with that data, including combining it with other complex and dissimilar forms of data for decision-making informed by a much fuller picture.4 AI can improve the analysis of satellite and drone surveillance data, environmental data, and even historical mission data.3 AI-powered data analysis can be used to improve visual models and real-time intelligence.
AI-enabled autonomous vehicles and other equipment also present unique opportunities for defense. They may be equipped for real-time decision-making and allow for fewer troops to be put at risk, but are limited by connectivity and data sharing restrictions.5 AI can also improve weapons systems’ ability to recognize targets and hit them with precision, but ethical concerns remain.5 Significant opportunities for defense industry transformation exist in infrastructure and logistics whereby AI can provide predictive maintenance, create digital twins for safe simulation and testing, and offer route optimization.5 Clearly, the opportunities for AI in the defense industry are endless.
Powering AI
TrueShares Technology, AI & Deep Learning ETF (LRNZ) seeks to provide thematic exposure to a concentrated portfolio of technology companies that are significantly involved in the application of advanced levels of artificial intelligence within their businesses. LRNZ generally holds 20-30 positions representing companies we believe possess innovative AI and Deep Learning solutions that represent a distinct competitive advantage in a particular industry.
Supporting Veterans
The RiverNorth Patriot ETF (FLDZ) seeks capital growth through investing in mid to large cap companies that are domiciled in, listed in, and whose revenues are primarily generated in the U.S. A majority of the fees are donated to the Folds of Honor Foundation, a charity focused on providing educational scholarships to the families of veterans and first responders who have been disabled or killed in action. FLDZ is designed to provide an alternative approach to charitable giving. Since 2007, Folds of Honor has a cumulative average ratio of over 91% of every dollar raised going to their scholarship program and has awarded over 52,000 educational scholarships. As of December 31, 2024, $75,000 has been donated to the Folds of Honor Foundation through FLDZ.
- https://www.marketsandmarkets.com/ResearchInsight/artificial-intelligence-military-market.asp
- https://www.nationaldefensemagazine.org/articles/2025/7/25/defense-industry-advancing-artificial-intelligence-for-manufacturing-drones
- https://www.businessdefense.gov/ibr/pat/docs/AI-and-the-DIB-Roadmap.pdf
- https://www.deloitte.com/content/dam/assets-zone3/ca/en/docs/industries/government-public-services/2024/ca-en-final-aoda-deloitte-ai-defence-security-pov-v2.pdf
- https://www.strategyand.pwc.com/de/en/industries/aerospace-defense/ai-in-defense.html
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