Tianfeng: "AI + military industry" vertical applications accelerate landing and focus on investing opportunities in military AI in large models/data/specialized computing power/vertical applications and other directions.

Tianfeng has released a research report stating that the military industry is one of the representative fields with rapid development and solid implementation of AI vertical applications, and its future development is promising. The weight of software products in modern equipment systems is increasing, and equipment supply is undergoing reform. It is necessary to actively embrace the changing trends in the AI industry, fully understand the direction of future equipment intelligence development, and focus on investment opportunities in military AI in directions such as large models, special computing power, vertical application end products, data links, and intelligent equipment. The development of equipment body and combat decision-making is in a dual-track stage of intelligent development. China's artificial intelligence large model DeepSeek has attracted market attention due to its low cost and high performance, igniting a "quake" in the US technology circle. In the future, artificial intelligence (AI) may become the most significant feature of next-generation equipment, including advanced fighter jets. Unmanned and intelligent are the main directions for the development of the new generation of equipment, which is changing and may even reshape the design concepts and development processes of equipment. AI may play an unprecedented role in areas such as serving as combat staff assistants, equipment use and maintenance, situational intelligence perception, and decision-making support. The military industry is one of the representative fields with rapid development and solid implementation of AI vertical applications, and its future development is promising. The weight of software products in modern equipment systems is increasing, and equipment supply is undergoing reform. The current rapid development of the new round of technological and military revolutions, the acceleration of the evolution of the form of warfare, and major changes in the concept, elements, and methods of winning are all happening. The position and role of the network information system in modern warfare are more prominent than ever. The 20th Party Congress report explicitly emphasizes the need to coordinate the construction and use of the network information system. The level of construction and use of the network information system directly determines the effectiveness of the combat command system, intelligence reconnaissance system, firepower system, comprehensive support system, etc. In this context, the Information Support Force of China came into being (the Information Support Force was established on April 19, 2024, as a newly created strategic arm, a key support in coordinating the construction and application of the network information system, playing an important role and bearing great responsibility in promoting the high-quality development of the People's Liberation Army and winning modern warfare). Therefore, it is urgent to develop a coordinated network information warfare system, characterized by the increased weight of software products in equipment systems (e.g., the F35 fighter jet software code volume is 125 times that of the F16 fighter jet). In comparison to traditional equipment, the development base of software products is lower, but the procurement methods are more flexible, and the pricing system is more open. Overseas, the US companies Palantir and Anduril are joining forces with over a dozen Silicon Valley companies such as SpaceX and OpenAI to form a technology alliance to jointly bid on US government defense projects, challenging defense giants like Lockheed Martin, Raytheon, and Boeing. This behavior of overseas technology giants may also indicate that AI is playing an increasingly important role in the construction of defense systems. Highlighting investment opportunities in military AI in directions such as large models/data/special computing power/vertical applications Artificial intelligence is rapidly changing many aspects of society and is also playing an important role in the military industry. By embedding AI into equipment systems and creating intelligent equipment that can think independently, equipment can effectively enhance its autonomous decision-making ability, situational awareness, efficiency, respond faster and effectively reduce human risks. Currently, the AI industry is booming, and military AI is in its early stages of industrial development, with a generally positive trend and application potential in various combat modes (unmanned combat, manned/unmanned collaboration, electronic warfare, data links, swarm warfare). It is necessary to actively embrace the changing trends in the AI industry, fully understand the direction of future intelligent equipment development, and focus on investment opportunities in military AI in directions such as large models, special computing power, vertical application end products, data links, and intelligent equipment. Military AI is one of the important application scenarios in the artificial intelligence industry and is also an important manifestation of the implementation of new quality production in the technology industry. The emergence of AI technology may drive equipment towards greater intelligence, unmanned, and may even trigger a new round of military technological revolution. It is recommended to pay attention to the military AI-related industry chain targets and actively embrace the trends of equipment changes: 1) Application products: Sichuan Discovery Dream Science & Technology, Geovis Technology Co., Ltd, Piesat Information Technology, Beijing DeepGlint Technology, Bingo Software, Nancal Technology, Chengdu Zhimingda Electronics Co., Ltd, etc.; 2) Physics AI: Shanghai Suochen Information Technology, etc.; 3) Military simulation: Beijing Huaru Technology, etc.; 4) Special computing power: Shanghai Fudan Microelectronics Group, Changsha Jingjia Microelectronics, Chengdu Sino-Microelectronics Tech. (jointly cover with electronic group), etc.; 5) Data encryption: Jiayuan Science and Technology, etc.; 6) Data links: China Aerospace Times Electronics, Chengdu M&S Electronics Technology, Chengdu Zhimingda Electronics Co., Ltd, Tianjin 712 Communicat.- Ion & Broadcasting, Guangdong King-strong Technology, etc.Intelligent equipment: a) Airborne aircraft: Jiangxi Hongdu Aviation Industry, AVIC Aircraft Co., Ltd., AVIC Shenyang Aircraft, China Aerospace Times Electronics, Avic (Chengdu) UAS (jointly covered with the mechanical group), Aerospace CH UAV, Chengdu Jouav Automation Tech Co., Ltd, etc; b) Ground Siasun Robot & Automation: Beijing Jingpintezhuang Science And Technology, Inner Mongolia First Machinery Group, etc; c) Projectile products: North Navigation Control Technology, Anhui Greatwall Military Industry, North Industries Group Red Arrow, etc; d) Underwater Siasun Robot & Automation: Beijing Zhongkehaixun Digital S&T Co., Ltd., etc. Risk warning: The AI product research and development progress is not as expected, the market prosperity is not as expected, subjective risk estimation, etc.