How the Pentagon Will Use AI (Hint: It's Not the Battlefield)

The Department of Defense recently entered into an agreement with artificial intelligence (AI) software company C3.ai (AI 0.72%) to utilize its technology. But what role does AI play in military operations? In this video clip from "The AI/ML Show," recorded on Feb. 2, Fool contributors Lou Whiteman and Jason Hall explore the ways the government can use artificial intelligence effectively.

Lou Whiteman: And not to I guess undersell what it is, but there's another company that mixes tech and AI and the Pentagon that I don't want to mention because there will be 300 emails to me about it, but I see their bulls all the time talking about that they're going to get a contract for battlefield management, which is something right out of War Games. I can tell you that's not where you're going to see big chunks of revenue from the Pentagon right now. If there's one thing the Pentagon cares more about, that it's revered inside the Pentagon more than the U.S. flag, it's the command chain, it is the decision tree. I have never seen a turf war in the Pentagon end with, hey, why don't we just turn this over to a computer and none of us do it? A lot of these predictions of what artificial intelligence is going to do in the near term on the battlefield, and we can get into why there's very good reasons why we're not going to see some of these hype thing. I mean, the U.S. government right now could put an armed satellite into space, over North Korea, over Russia, whatever you want to say, and at the first sight of World War III, counter-strike. We have the technology to do that now. There's good reasons why we're not going to do that now and those aren't going to go away anytime soon. A lot of the close your eyes and think about military and AI, a lot of that's not going to happen.

Jason Hall: Lou, correct me if I'm wrong but the short version of this is, it's the same use case for most very large enterprises. It's a way to make things more efficient and effective, drive out costs, get better. They're looking at returns in a different way because they're looking at driving out the cost to free up capital to deploy in other ways, it's the same use cases. They're not looking because it's the story, you went on the battlefield by having, it's the supply chain, it's the logistics, it's how you manage your dollars and moving things around and that's what they need AI to help them do better.

Whiteman: Again, incrementalism. I mean, Project Maven was fun to talk about, unless you're in Google's HR, but Project Maven was just an experiment. This is a revenue-generating contract and look, C3 in their case, they are a very small company, they're I think about $250 million in annualized revenue. If they get any piece of that $500 million, that's a big deal. Honestly, dying to hear Jose. But I think the General Dynamics that's where they've done very well. Again, certain other companies love to put out a press release every time they have lunch with the Pentagon. But behind the scenes of GDIT or even C3 now, these $100 million to $200 million contracts bolted on doing specific little things, that's where as an investor you can really do well over time because that's where the action is.