June 8th, 2023 | 07:45 CEST
ChatGPT and AI revolution reaches defence stocks: Palantir, Hensoldt, Star Navigation Systems
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"[...] In Canada, there is $1.75 of debt for every dollar of disposable income - and that was true even before the pandemic. [...]" Karim Nanji, CEO, Marble Financial
Star Navigation: Will the share take off now?
Let's start with the hot stock: Star Navigation. The Canadian newcomer specializes in collecting and analyzing data in the transport sector (ships, aircraft, commercial vehicles). The data is analyzed in real-time, and AI is increasingly being used in the process. For example, Star Navigation's real-time analytics help airlines optimize their operations by providing actionable insights into fuel consumption, engine performance and other key metrics. In this way, fleet safety and efficiency can be increased. In doing so, the Canadians are deliberately targeting young markets in South East Asia, Africa and the Middle East. After concentrating on development last year, this year's focus is on sales. And there are first successes.
Star Navigation has signed a far-reaching memorandum of understanding with the Caverton Offshore Support Group. With 650 employees and a fleet of 30 helicopters and aircraft, Caverton is one of the leading logistics service providers for the oil and gas industry in West Africa. Firstly, the LOI stipulates that Caverton will use Star Navigation's complete solution for flight monitoring and safety surveillance across its entire fleet of helicopters and aircraft. In addition, Caverton is also to service the Star Navigation systems in West Africa in the future. Caverton manager Ibrahim Bello said, "Our focus has always been to provide an efficient, unwavering commitment to the highest standards of safety in terms of reliability, quality and customer experience. With the STAR-ISMS product, Caverton has been uniquely able to exceed all of our customer's expectations, offering the maintenance, engineering, offshore oil and gas and military/defence sectors the opportunity to take advantage of the latest technology and enhanced developments in Africa's aviation sector." Within the next few weeks, the cooperation is to be concretized. By then, the share, currently trading at CAD 0.04, should pick up speed again. In April, it reached a high of CAD 0.09.
Palantir: US military strikes again
Palantir Technologies demonstrates how quickly things can go up when a share is discovered or - as in this case - rediscovered. After good quarterly figures, the share took advantage of the AI euphoria and has doubled in value since the beginning of May. The recent jump in the share price was a multi-year contract with a volume of up to USD 463 million from the US military. With the help of the software company and AI, petabytes of data will be analyzed in the future to facilitate decision-making.
"We look forward to helping the customer maintain its decision-making edge in the next era of competition and are very grateful for the opportunity to continue serving this important community," said Akash Jain, President of Palantir USG.
At marketwatch.com, analysts are quoted by William Blair as saying that it is "only" a repeat order. However, the experts believe that the annual revenue from this collaboration will still increase from USD 65 million to more than USD 80 million. Given Palantir's annual turnover of over USD 2 billion, the order should not be overestimated.
Hensoldt: AI crucial for the performance of many products
In Germany, Hensoldt is a company with a strong foothold in military technology and AI potential. In the current year, Hensoldt has entered into a strategic cooperation with the AI specialist, 21strategies. The aim is to jointly drive the development of next-generation AI for defence systems. As part of a financing round, Hensoldt also invested in 21strategies.
AI is crucial to the performance of many Hensoldt products, the MDAX-listed company stated. With new AI approaches of the so-called third wave, such as cognitive AI, decisions in combat situations and the reaction to unknown threats could be decisively accelerated. Celia Pelaz, Member of the Board and Chief Strategy Officer at Hensoldt: "As a technology company in the defence industry, we have special requirements for AI. In order to optimally enable highly complex defence systems, we need to master artificial intelligence in its entire range. To this end, we develop many AI competencies in-house and supplement them in a very targeted manner by working with specialized partners such as 21strategies." Hensoldt shares have gained a good 20% this year to almost EUR 28. Warburg Research recently upgraded its target price from EUR 34 to EUR 36. The analysts recommend buying the stock.
AI will change the world. How quickly and whether the current hype is exaggerated is difficult to assess. Palantir seems to have finally found its way to profitable growth. However, its market capitalization of USD 32 billion still holds much growth potential. Star Navigation, on the other hand, is still at the beginning. If more orders come in this year, a significantly higher share price should be possible. Hensoldt is well-positioned with its sensors and other technologies.
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