AI Defense Stocks: Rickards’ Contrarian Play for an AI Crash

One of the most interesting aspects of Jim Rickards’ AI Black Paper presentation is that he is not entirely bearish on AI. While he believes commercial AI stocks are in a bubble, he sees defense AI as a separate category that could thrive regardless of what happens to the commercial market.

Rickards references defense AI stocks in his bonus report Trump’s AI Arsenal: How Investing in A.I. Superweapons Could Turn $1,000 into $162,000. He hints at a stock partnered with Elon Musk’s SpaceX to develop something called Star Shield, and another with an AI-powered long-range drone that can take out targets up to 3,000 miles away. The specific tickers are behind the paywall, but the thesis is that defense spending on AI superweapons will accelerate regardless of what happens to the commercial AI bubble.

The thesis makes sense on its own merits. Defense spending tends to be counter-cyclical and is driven by geopolitical imperatives rather than market sentiment. The U.S. government is investing heavily in AI-powered defense systems, and that spending is likely to accelerate whether or not OpenAI becomes profitable.

Rickards frames this as a hedge: if the commercial AI bubble pops, defense AI stocks could benefit as capital flees speculative tech and flows into more tangible, government-backed AI applications. If the bubble does not pop, defense AI still benefits from rising military AI spending.

The report title itself, “Trump’s AI Arsenal: How Investing in A.I. Superweapons Could Turn $1,000 into $162,000,” signals the potential upside Rickards sees. While that 162x return projection is aggressive, it illustrates the conviction level. The specific tickers are in the report that comes with the Strategic Intelligence subscription.

The AI Black Paper presentation promotes Strategic Intelligence, Rickards’ monthly newsletter from Paradigm Press. The price is $49 for 6 months, originally $299, an 83% discount that works out to about $8 per month. The guarantee is 3 months: subscribers can request a full refund for any reason within that window and keep all reports.

The package includes six months of Strategic Intelligence plus six special reports: AI Fallout (the biggest AI losers to remove from your portfolio immediately), The AI Black Paper Blueprint (his personal million-dollar roadmap), AI Meltdown Insurance (how to profit from the coming crash), Trump’s AI Arsenal (how investing in AI superweapons could turn $1,000 into $162,000), The Perfect Physical Gold Portfolio, and How to Make Your Home Your Personal Fortress.

Rickards is explicit that defense is the one sector he is bullish on right now. In his words, the defense sector has “historically done an outstanding job of delivering value to shareholders” and is “a sector that could capture the most value from AI – without any of that AGI hype needed.” He points out that AI is already being used in the latest Iranian conflict, and that the Pentagon is integrating AI into its operations. The money is flowing, he says, regardless of what happens to commercial AI valuations.

The Star Shield system Rickards references is described as an early warning system for America that is part of Trump’s Golden Dome defense system. The second defense company in the report has developed an AI-powered long-range drone capable of taking out targets up to 3,000 miles away. Rickards calls this “the future of warfare.” These are not speculative consumer applications dependent on advertising revenue or user growth, but hardened military systems with committed government buyers.

The contrast between defense AI and commercial AI is stark when you look at the fundamentals. OpenAI is losing more than a billion dollars a month and, according to Deutsche Bank, will need to accumulate $143 billion in negative cash flow before making a single dollar in profit. Palantir has a P/E ratio of 222, meaning it would take 222 years at current earnings to make your money back. Nvidia became the first company in history worth $5 trillion despite not manufacturing a single chip itself. Meanwhile, defense contractors have real products, real government contracts, and real revenue. Rickards frames defense AI as the one corner of the AI ecosystem where the technology is being deployed for tangible, mission-critical purposes rather than to justify speculative valuations.

It is worth noting that defense stocks carry their own risks, including dependence on government contracts, regulatory changes, and long development cycles. The $1,000 to $162,000 projection should be viewed as an illustrative example, not a guarantee.

Where to Learn More

For the complete analysis, read our AI Black Paper review covering Jim Rickards’ full thesis on the AI Minsky Moment.

Read our guide to portfolio protection strategies for the AI age.

For a gold-focused macro thesis, see our BTM Gold War review covering Dylan Jovine’s case for a third gold revaluation.

Ready to explore Jim Rickards’ full research? Learn more about Strategic Intelligence here.

This is not financial advice. Always do your own research before investing.