Defense stocks often fly under the radar, but when innovation and military demand collide, the potential upside can be massive. From shipbuilders to software providers, companies serving the U.S. Department of Defense are increasingly tapping into AI-driven tools to accelerate performance and gain long-term contracts.

What Happened? Shares of data-mining and analytics company Palantir (NYSE:PLTR) jumped 3.9% in the afternoon session after the company's stock continued to benefit from strong momentum in the artificial intelligence sector and positive investor sentiment.