Google parent company Alphabet (GOOGL) has been awarded a $200 million contract from the U.S. Department of Defense for the development of various artificial intelligence (AI) projects.
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Alphabet is the most high profile publicly traded company to secure a lucrative AI contract from the U.S. Defense Department. Other companies that were granted contract awards of up to $200 million for AI work include privately held start-ups Anthropic, OpenAI, and xAI.
American defense officials said the awards will help the agency accelerate its adoption of “advanced AI capabilities to address critical national security challenges.” The selected companies will work to develop AI agents across several mission areas at the Defense Department, although exactly what projects Alphabet and the other companies will work on is not clear.
Strategic Advantage
In a news release, the U.S. Defense Department said, “The adoption of AI is transforming the Department’s ability to support our warfighters and maintain strategic advantage over our adversaries.” This appears to be Alphabet’s first contract with the Defense Department specifically for AI.
OpenAI was previously awarded a year-long $200 million contract from the Defense Department in 2024, shortly after it said that it would collaborate with defense technology start-up Anduril to deploy advanced AI systems for “national security missions.” In June of this year, the company launched OpenAI for Government for U.S. federal, state, and local government workers.
Is GOOGL Stock a Buy?
The stock of Alphabet has a consensus Strong Buy rating among 37 Wall Street analysts. That rating is based on 28 Buy and nine Hold recommendations issued in the last three months. The average GOOGL price target of $202.24 implies 12.24% upside from current levels.
