Artificial intelligence (AI) has transformed from a behind-the-scenes technology to an essential part of our daily experience. While earlier AI milestones -- like DeepMind's AlphaGo victory over the world Go champion in 2016 -- created temporary public interest, they didn't fundamentally change how most people interacted with technology.

The emergence of generative AI has changed this dynamic completely. Tools such as OpenAI's ChatGPT and image generators like Stable Diffusion have made AI's capabilities immediately accessible and visibly impressive to everyday users. These technologies produce sophisticated outputs and tackle problems that were once considered exclusively within human capability.

Image source: Getty Images.

This technological evolution represents more than just scientific progress. According to McKinsey & Co., generative AI could generate between $2.6 trillion and $4.4 trillion in annual economic value across numerous industries in the decades ahead.

For investors seeking to capitalize on this transformative trend, two AI-powered defense stocks stand out for their exceptional growth potential. Read on to find out more about these ultra-high-growth AI stocks.

A leader in national security

BigBear.ai (BBAI -12.50%) stands out in the defense and security sector with its deep domain expertise in AI-powered decision intelligence. In March 2024, the company expanded its capabilities by acquiring Pangiam, a leader in vision AI, which strengthened its portfolio in facial recognition, anomaly detection, and biometrics -- key technologies for modern security operations.

BigBear.ai's strategic edge lies in its high-caliber leadership and close ties to the U.S. military. Newly appointed CEO Kevin McAleenan, a former Acting Secretary of Homeland Security, brings critical national security expertise to the helm.

Further cementing its role in defense, BigBear.ai will deploy its AI orchestration platform, ConductorOS, at Exercise Talisman Sabre 2025, a multinational military exercise in Australia. ConductorOS enhances real-time model updates and improves military decision-making, reinforcing the company's position at the forefront of AI-driven defense innovation.

As the global push for AI integration in military operations accelerates, BigBear.ai is exceptionally well-positioned to lead the next evolution of autonomous defense systems. Simply put, this company is a key player in next-generation military technology and poised to help shape tactical capabilities for decades.

A pioneering force in intelligent software

With proprietary platforms that enable optimized decision-making for governments and enterprises, Palantir Technologies (PLTR -10.73%) occupies a central position in the AI revolution. The company's impressive Q4 2024 performance demonstrated remarkable growth amid an intensifying global AI arms race, with U.S. revenue increasing 52% year over year to $558 million and U.S. commercial revenue surging 64% to $214 million, compared to the same period last year.

Palantir's competitive edge derives from its core "ontology framework," which uncovers hidden data relationships and fuels advanced decision-making capabilities.

In detail, Palantir operates through two primary channels -- the government-focused Gotham platform and the commercial-centric Foundry platform. Furthermore, the 2023 launch of its Artificial Intelligence Platform added a critical layer to its offerings by enabling non-technical users to harness large language models and fully leverage Palantir's technology.

Thanks to its potent business model, Palantir continues to solidify its presence in both government and commercial sectors. Specifically, U.S. government revenue grew by a robust 45% year over year to $343 million in Q4 2024, while the company's innovative boot-camp-style sales approach helped to drive a whopping 73% increase in U.S. commercial customers over the past year.

CEO Alexander Karp declared in the company's latest quarterly press release that "a software juggernaut has indeed emerged." Thus, Palantir appears uniquely positioned to capture significant economic value downstream for software companies that enable AI-driven productivity gains in enterprises. Its robust financial performance and favorable strategic positioning underscore its potential as a compelling lifelong investment opportunity.

Two AI stocks worth buying and holding long term

For investors seeking long-term stakes in the AI revolution, BigBear.ai and Palantir Technologies deliver a healthy dose of value and growth potential. Their specialized focus, proven execution, and expanding market opportunities make these stocks quintessential buy-and-hold candidates in an increasingly AI-driven global economy. As AI becomes ever more integral to defense and enterprise operations, these companies' robust strategies and innovative capabilities position them to benefit immensely from this paradigm shift.