Though it's not a pure play, Nvidia stocks have the distinctive characteristics of “defense technology” stocks.
nvidia (NVDA) 1.65%))AI chips and related technologies leaders are poised to benefit from two trends in the defense industry.
1. Global surge in defense spending
2. “Technology” for defense systems
There are many reasons why you might be bullished about Nvidia stocks as a long-term investment – this is yet another investment. However, this topic is quite undervalued in financial coverage, so I decided to dig deeper.
Image source: Getty Images.
Why is there a lack of data on connecting to NVIDIA defense applications?
There are probably a few reasons why there is a lack of information about connecting to Nvidia's defense applications. First, there is no doubt that some use of Nvidia's technology has been categorized, so there is no press release or discussion of their management.
Another reason is likely due to the topic of AI being used in warfare, which makes some people uneasy. Therefore, Nvidia may be embarrassed to publish defense-related news, as the company's success relies on increasing adoption of AI.
What's more, it's different from an analytics company that has AI, for example. Palantir TechnologiesNvidia has a consumer business, so we don't want to risk turning off some consumers. In the first quarter, NVIDIA's consumer-centric gaming business generated $3.8 billion, accounting for 8.6% of total revenue.
Trend 1: Global surge in defense spending
Increased investment in Europe and NATO defense
In March, Ursula von del Reyen, president of the European Commission, wrote: On a large scale It will boost defense spending. ” [My emphasis.]
Then at the NATO (North Atlantic Treaty Organization) summit in June, members of the alliance said, “We agreed to increase our annual defence spending, and ultimately up to 5% of gross domestic product.”
The contract represents a significant increase. According to NATO, in 2024, NATO members (30 European members and Canada) averaged NATO members (30 European members and Canada) except for the US (30 European members and Canada) invested 2.02% of their GDP in defense. With the contribution of about 3.4% of GDP, if added to the US, that number increases in the mid-point period of two rounds.
Some defense-related stocks and Defense Exchange Trade Funds (ETFs) have already benefited from increased investment in defense. First half of 2025, rheinmetallGermany's biggest defense contractor experienced a 36% year-on-year rise in defense revenue. In 2025, Rhinemetal stocks surged 189% through the writing on August 19th. S&P 500's (^gspc 1.52%)) 9.9% return.
The US also plans to increase defense spending in particular
President Donald Trump's Defense Budget request for fiscal 2026 was $1.01 trillion, an increase of 13.4% from the level he enacted in fiscal 2025. (Our country's accounting year begins every year on October 1st.) This law is progressing through Parliament at the time of this writing on August 19th.
Trend 2: “technology” for defense spending
The second trend in global defense spending is the increase in prioritization of cutting-edge technologies such as AI. Autonomous systems (including autonomous drones); space-based systems; and cybersecurity. (There are several overlaps between these categories.)
Higher defense spending on AI will naturally benefit AI chip leader Nvidia
This trend naturally benefits NVIDIA as it is a much more dominant chip to handle AI workloads. This includes AI training, often done in data centers, and AI inference, which is increasingly done “at the edge.” This means within a machine where AI applications are deployed, such as mobile phones, drones, vehicles, etc.
President Trump's Presidential Order to “unleash American drone control”
In June, President Trump signed an executive order (EO) called “Unleashing control of American drones,” which aimed to speed up US drone production. This EO has a section called “Delivery drones to our fighters” and should increase the use of drones in the military.
US defense giant Northrop Grumman's (NOC) -0.80%)) CEO Kathy Warden is working on the topic of autonomous systems, including autonomous drones, in the company's second quarter revenue call in late July. “Investing in Beacons” [a flying-mission test bed] It also supports the administration's call for more next-generation autonomous systems. ”
Thanks to AI, drones for a variety of uses are becoming autonomous. This trend could benefit Nvidia as Jetson's embedded AI computing platform could function as the “brain” for drones and other types of robots.
Venture capital flows into “defense technology” companies
The “technology” of defense spending has led to an increase in the category of companies known as “defense technology” companies. These are high-tech companies that use their products in their defense applications, although not necessarily exclusive.
In 2024, global venture capital (VC), a defense-related high-tech company, jumped to $31 billion, jumping to 33% year-on-year, according to consulting giant McKinsey & Company. The biggest investment areas were AI ($12 billion), next-generation communications networks and autonomous systems ($4 billion each).
Nvidia's involvement in defense applications
Nvidia's “US Public Sector” Partner
Data Source: Nvidia.
Within the “System Integrators” category, Nvidia's “US Public Sector” website page lists working with four major defense contractors.Raidos, Lockheed MartinNorthrop Grumman, and RTXRaytheon Unit) and three management consulting companies that do many government jobs (AccentureBooze Allen Hamilton, Deloitte).
The website page also includes a list of “solution providers” where Nvidia works. These include Dell and Hewlett Packard Enterprise. Both create computer servers that integrate NVIDIA chips, so they may be selling some of these systems to the government. The other 12 companies are private.
This does not mean that all of the Nvidia technologies used in defense-related applications are sold to one of the partners listed in the US public sector website section. These are just entities Promotion that's right Direct Work together.
Nvidia's partnership with Northrop Grumman appears to be particularly profound
My research suggests that Northrop and Navidia have a long-standing relationship. Northrop's name came up more frequently than other large defense contractors.
This is part of a press release released in May 2024 entitled “Noterrop Grumman to Accelerate nvidia Software.”
Northrop Grumman…We announced our contract today Accelerate the development of the most advanced systems with access and use of NVIDIA AI software. ” [Emphasis mine.]
This industry-leading deal will allow Nothrop Grumman to access Nvidia's extensive portfolio of Nvidia's AI software, its platform, and frameworks including Nvidia Omniverse. [Omniverse is generally used for simulation purposes.]
Certainly, this looks like an “industry-leading agreement” as Northrop called it. Naturally, this release is very common. Perhaps it can be assumed that many, if not most, of “advanced systems” are defence-related.
In June 2025, Northrop released a press release entitled “Northrop Grumman Expands Use of NVIDIA AI Technology to Advance Space Solutions.” It reads partially:
[Northrop] We are expanding the use of NVIDIA technology, including adding space applications to the NVIDIA Omniverse simulation platform and leveraging the NVIDIA ISAAC lab framework for training, development and deployment of artificial intelligence (AI) for cognitive spacecraft operations.
Isaac Lab is Nvidia's framework for robot learning. It appears Northrop is planning to use Nvidia's AI technology to build a specific spacecraft – perhaps a satellite? – Autonomous.
Defence technology company Mercury Systems and Nvidia have been working together for many years
Defense Technology Company Mercury System It advertises that he has worked with Nvidia for over 20 years. Here's a snippet from the introduction to Mercury video in May 2025: “As a preferred partner, Mercury brings Nvidia's latest GPU and artificial intelligence (AI) technology to some of the most demanding environments on and beyond, revolutionizing aerospace and defense applications by transforming data into insights that can be instantly transformed.”
Essentially, what Mercury does is provide the defense and aerospace industry for “robust” versions of Nvidia's products.
Nvidia's technology was used in military equipment (tanks, fighter jets) at least all the way back until 2012.
I don't know how long Nvidia has been involved in the defense industry, but it's been for quite some time.
In a December 2012 NVIDIA press release, we found a contract for a contract with DARPA (the research division of the US Department of Defense). [four higher-end auto manufacturers], Aircraft including F-22 Raptors and US Army tanks. ” [Emphasis mine.]
The F-22 Raptor is a US Air Force stealth fighter jet. In 2005, the service began invasion. These aircraft are still in use, but are no longer in production. With Lockheed Martin Boeing He was a major contractor.
My guess is that the F-22 and US Army tanks used Nvidia technology on digital equipment or related displays.
Solid government demand for NVIDIA's GPU-equipped professional workstations and Jetson platforms
Looking for government official records of the Request for Proposal (RFP), the name of Nvidia appeared a lot. The number of these RFPs from defense-related agencies (and other government agencies) included NVIDIA's GPU-equipped professional workstations and their Jetson platforms. This AI-powered embedded platform is used to develop autonomous drones and other robots, making Nvidia one of the top robot inventory.
Nvidia's technology is considered “unique” and “essential” by naval agencies
Here are some examples of the types of entries that NVIDIA investors should love: In July, the agency, which is part of the Navy, specified that it wanted to purchase a permanent license for the 250 NVIDIA RTX workstation and a five-year support service for 250 units.
Agents had to justify being specific to their brands and products and not open to other products. Product Originality,That one is deemed essential For the needs of a fulfilling agency. ” [Emphases mine.]
This phrase suggests that the demanding agency does not believe there is competition related to this Nvidia product.
Increase in global defense budget + Increase in defense spending on AI = Nvidia stock bullish
In short, defense budgets around the world are on the rise, and these budgets are increasingly prioritizing advanced technologies, including AI. Nvidia's position as a leading manufacturer of AI Enabling chips and platforms is well positioned to benefit from these two secular global trends.
