GET IN EARLY! Top 3 AI Defense Stocks to Make Millionaires in 2026

Fin Tek•Mar 31, 2026

Summary

Kuran identifies three under-the-radar AI defense stocks that he believes are set to win big, drawing a contrast with already well-known companies like Palantir and Nvidia. His main thesis is that defense spending is rapidly shifting away from multi-trillion-dollar plane projects towards more economical and effective solutions like autonomous systems, low-cost drones, cybersecurity, and advanced intelligence infrastructure. These companies are positioned to capitalize on this paradigm shift due to their real technology and existing government demand.

**AeroVironment:** Kuran introduces AeroVironment as an aerospace contractor specializing in autonomous systems, low-cost drones, and a unified software platform called AV Halo. He compares it to Palantir, noting that while Palantir is the 'software brain,' AeroVironment builds the autonomous systems that operate within the battlefield. The company is actively securing significant government contracts, including a $186 million order for Switchblade systems and $97 million for Genesis sensors, with a growing backlog. Kuran notes its $10 billion market cap is tiny compared to Palantir, and the loitering munitions market, where it operates, shows strong growth through 2030. He positions the stock as 'just above the middle' in terms of its early growth stage, offering upside. However, he cautions about its recent volatility, 'just okay' financial health, and a 'fair' valuation, citing a recent sales outlook cut due to a terminated Pentagon program as a key risk.

**Microsoft:** Kuran acknowledges Microsoft is not an 'under-the-radar' stock but argues its critical, often overlooked, role in government cloud, secure AI, and defense infrastructure makes it a strong play. Microsoft is a key partner for Palantir (Azure runs AI models), a vendor on the Pentagon's $9 billion Joint Warfighter Cloud Capability contract, and a leader in augmented reality for defense with HoloLens (an Army contract valued up to $21.9 billion over 10 years). Its Azure Government Top Secret cloud provides secure infrastructure for sensitive US government data. Kuran views Microsoft as owning the 'engine' and 'gas stations' for government software spending due to its bundled offerings of cloud, enterprise software, security, identity, and AI tools. He notes its technology and defense lock-in are very high. Financially, Microsoft is very strong, with rising profits and a P/E ratio that is the 'cheapest it's been since the breakout of generative AI,' making it a 'least risky way to play the Palantir like trade.'

**Leidos:** Kuran presents Leidos as an 'old-school' government contractor whose complexity hides significant value. He highlights its alignment with the new direction of defense spending, focusing on cheap drones, cybersecurity, faster deployment of autonomous systems, and intelligence infrastructure. Leidos offers diverse services, including airborne systems, autonomous ships (Sea Ranger, Sea Specter), and signals intelligence, acting as the 'connective tissue' across defense technology operations. The company has secured notable contracts, such as a half-billion-dollar contract for modernizing US Air Force cloud operations (March 2026), a $120 million DoD cybersecurity contract, and a $390 million NSA signals intelligence award. Kuran emphasizes that its revenue, net income, and cash flow are improving, and management is buying back shares. With a market cap under $20 billion and a P/E ratio below 15, Leidos is considered '25% undervalued' and significantly cheaper than the S&P 500 average and larger defense contractors. Kuran sees 'crazy upside' due to the market's inattention, despite risks from its ongoing evolution and diverse business segments.

Mentioned Stocks

MSFT

Sentiment: BUYAction: RECOMMENDED

Reasoning: Kuran argues that the market underappreciates Microsoft's deep integration into government cloud, secure AI, and defense infrastructure. Microsoft is a key partner to Palantir, running its AI models on Azure, and a significant vendor on the Pentagon's $9 billion Joint Warfighter Cloud Capability contract. Its Azure Government Top Secret cloud provides highly secure infrastructure for sensitive US government data, making it the 'engine' and 'gas stations' for government software spending. Microsoft's bundled offering of cloud, enterprise software, security, identity, and AI tools provides strong defense lock-in. Kuran states its P/E ratio is the 'cheapest it's been since the breakout of generative AI,' making it a 'least risky way to play the Palantir like trade' despite its large market cap.

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AVAV

Sentiment: BUYAction: RECOMMENDED

Reasoning: Kuran highlights AeroVironment as an aerospace contractor focused on autonomous systems, low-cost drones, and its AV Halo software platform, aligning with the shift in defense spending. The company is actively securing significant government contracts, including a $186 million order for next-gen Switchblade systems and $97 million for Genesis sensors, with a strong and growing funded backlog. Kuran notes its $10 billion market cap is small compared to Palantir, and the loitering munitions market shows strong growth through 2030, positioning it earlier in its growth phase with substantial upside. He mentions a current valuation at 'basically fair' at current profit levels. He also warns of volatility, 'just okay' financial health, and the risk of contract terminations, such as the recently cut sales outlook after the Pentagon terminated the SCAR program.

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LDOS

Sentiment: BUYAction: RECOMMENDED

Reasoning: Kuran sees Leidos as an undervalued 'under-the-hood operator' in defense technology, whose complexity hides significant value. He highlights its strong alignment with the new direction of defense spending, focusing on areas like cheap drones, cybersecurity, autonomous systems, and intelligence infrastructure. The company has secured substantial government contracts, including a half-billion-dollar contract for modernizing US Air Force cloud operations (March 2026), a $120 million DoD cybersecurity contract, and a $390 million NSA signals intelligence award. Kuran emphasizes its improving financials and that its P/E ratio (below 15) makes it '25% undervalued' compared to the market average and industry peers. He believes the stock offers 'crazy upside' due to current market inattention.

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