Google (GOOGL) Eyes Major AI Deal with the Pentagon for Classified Military Systems

Tech giant Google (GOOGL) is in talks with the U.S. Department of Defense to allow its Gemini AI models to be used in classified settings, according to The Information. If the deal goes through, it would deepen Google’s role as a government contractor and be a major shift from its past stance on military work. The deal would allow the Pentagon to use Google’s AI for all lawful purposes. However, Google is also trying to add safeguards to limit uses, such as mass domestic surveillance or fully autonomous weapons without proper human oversight.

Notably, these talks build on an existing relationship between Google and the Pentagon. In fact, Google agreed last year to let its AI be used for unclassified government work. In addition, the company is looking at ways to increase its computing capacity for defense work, which includes adding more GPUs and possibly running its custom AI chips in secure environments for the first time.

Nevertheless, this move is a big change from Google’s earlier position. In 2018, the company stepped away from the Pentagon’s Project Maven after internal backlash over using AI in military operations. Since then, however, Google has slowly rebuilt that relationship by creating a public sector division and pursuing new contracts. Although it still faces challenges, including competition from larger players in government cloud, attitudes within the Pentagon have become more positive. As a result, if these talks lead to a deal, Google could take on a much bigger role in providing AI technology to the U.S. military.

Are GOOGL Shares a Good Buy?

Turning to Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 26 Buys and five Holds assigned in the past three months. Furthermore, the average GOOGL price target of $385.97 per share implies 14.2% upside potential.