For decades, defense investors have relied on familiar yardsticks—contract wins, order backlogs and the number of platforms delivered—to judge which companies are pulling ahead. Xtend AI Robotics, Inc.(NYSE:XTND) CEO Aviv Shapira says artificial intelligence is making those metrics less predictive.
As defense increasingly becomes software-defined, he argues the industry’s biggest winners will be those that learn and adapt the fastest, not necessarily those that build the most hardware.
AI Is Changing Defense
Asked what metric investors should prioritize five years from now, Shapira didn’t point to revenue, production capacity or contract value. Instead, he named a metric most investors have never heard of.
“Five years from now, the most important metric will be operational learning velocity,” Shapira told Benzinga in an exclusive email interview. “This means how quickly a company can turn field feedback into a verified, deployable capability update across an operational fleet.”
The idea reflects a broader shift unfolding across the defense industry. Rather than viewing military platforms as largely fixed assets that receive occasional upgrades, companies are increasingly building AI-enabled systems that can continuously improve through software updates. That changes what creates long-term competitive advantage.
Shapira contrasted this emerging framework with the metrics investors traditionally emphasize.
“The defense market still focuses on contract value, backlog, number of platforms delivered and the performance of an individual system,” he said. “These metrics will remain important, but they do not fully capture adaptability.”
Software Drives Adaptability
Shapira’s argument builds on a broader thesis that software—not hardware—is becoming the defining differentiator in modern defense programs. He described XTEND’s XOS platform as a hardware-agnostic operating layer that allows capabilities to improve across an entire fleet instead of resetting whenever new equipment is introduced.
That evolution, according to management, means investors may need to look beyond production scale and toward a company’s ability to rapidly translate operational feedback into software improvements. That resembles how software companies compound value through continuous product updates, even though defense manufacturers have historically been evaluated on manufacturing metrics.
Shapira cautioned that relying on technological superiority alone is becoming increasingly risky. “A static technological advantage can disappear quickly,” he said, pointing to a battlefield where inexpensive drones, electronic warfare and evolving countermeasures can rapidly erode an incumbent’s edge.
Why it Matters
Shapira’s comments suggest the next generation of defense leaders may be distinguished less by the size of their backlog than by the speed of their software improvement cycle.
If AI continues reshaping military procurement and operations, investors may increasingly evaluate defense companies not just on what they deliver today, but on how quickly they can improve what is already in the field.
Image courtesy XTEND
