At 41p, Aston Martin (LSE: AML) shares look like a possible once-in-a-decade buying opportunity. Certainly, big British names trading for less than a 50p coin have proved to be big winners in recent years. Lloyds shares dipped as low as 41p in 2024 only to rise 163% and offer some big dividends too. Rolls-Royce briefly went down to around 40p a few years back and investors who bought at the low are up 20 times since then!

Can Aston Martin repeat such successes? Is the 95% fall in share price a golden buying opportunity? Could the 41p share price be as cheap as it sounds?

Issues

Let’s start with the problems. This is a loss-making company and has been for years. The firm has lost over a billion since 2022 and debt is piling up. Net debt of £1.4bn looks eye-watering compared to the firm’s market cap of around £400m.

Are things looking up? Not in the short term. One report has the firm running out of liquidity by the second quarter of this year. Management have already been making creative moves to find cash – such as selling Formula 1 naming rights – and it looks inevitable that they’ll be raising cash from shareholders in the near future.

This all comes against the backdrop of unfavourable macroeconomic factors. Notable issues include the Trump tariffs and changes to China’s luxury car tax, which will both eat into profits in two key markets for the firm’s cars.

Turnaround

What might turn things around here? To put it simply, selling cars. The firm is in the process of rolling out the new Aston Martin Valhalla, a £850,000 hybrid sports car which a lot is counting on.

Will the Valhalla be a smash hit? It’s pretty enough. The car’s beauty managed an appearance on the James Bond film No Time to Die too. I’m no petrolhead, but the car looks like the kind of machine that would justify that massive price tag. Though it remains to be seen just what the demand is for hybrid (part-electric) sports cars.

Another issue is the speed with which these cars are getting made. The first customer car was delivered in December 2025 – four years after the car’s appearance in the Bond flick. And the latest data I can find reveals that around 100 cars have new owners. This is slow going for the vehicle that wants to turn around the company’s fortunes.

It might be worth mentioning at this point that Aston Martin has gone bankrupt seven times in its 112-year history. Shareholders don’t come out well when a company runs out of cash. And with a fresh funding crisis on the horizon, I can’t say this is a stock I’m looking to invest in at the present.

The post Aston Martin shares are now only 41p! appeared first on The Motley Fool UK.

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John Fieldsend has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

When trying to decide whether to buy or sell BAE Systems (LSE: BA.) shares, it’s easy to get wrapped up in the big news. The conflict in Iran is a recent one; it helped the share price rise 45% since December. The increase in government defence spending since the Ukraine invasion was another. The share price is up 325% in the last five years partly because of that.

Each new day might bring a ceasefire or a worsening of hostilities, which can cause big swings in the value of the shares of this kind of defence firm.

But companies don’t make good investments from such macroeconomic factors alone. A business is a good one when it provides products or services that people want to spend money on. And by that metric, BAE Systems has had an absolute belter of a few days…

Eye-catching

The most eye-catching news, for my money, was the successful testing of an anti-drone weapon for the Eurofighter Typhoon. The last few years have upended what we know about modern conflicts. One key realisation is that unmanned drones are now a key part of warfare. Developments to counter this technology are key for BAE Systems to stay on the leading edge.

Two other pieces of good news come in the way of new orders for the firm. The US awarded a $146m contract for M776 cannons. The firm also secured a $180m contract from Sweden for an anti-aircraft system. This is yet more evidence that the FTSE 100 defence firm is still producing the kind of state-of-the-art kit that is valued by governments across the globe.

This all comes on the back of the firm announcing in its February full-year results that the order backlog had grown to £83.6bn. To sum up, the orders keep rolling in, and I think the early signs are the backlog will continue growing over the coming months.

Worth it?

As might be clear from the details above, this might not be a company that everyone feels comfortable investing in. BAE Systems produces weaponry designed to be used against other countries and militaries. Many may not wish to make a personal profit from such an endeavour.

There are those who believe that these companies will always exist, however. For investors who are thinking about purchasing BAE Systems, their attention may turn towards the valuation. The shares currently trade at 33 times earnings.

Another way to look at that is as 3p of company earnings for each £1 invested. That’s quite low compared to the FTSE 100 average of around 6p and some of the cheaper Footsie stocks getting 15p-20p. In other words, there is an expectation of growth in the price an investor pays for a share in BAE Systems.

Personally? I think the price will be justified and the recent announcements are evidence of that. I think the stock is worth considering.

The post Up 325% in 5 years! But are BAE System shares still a no-brainer buy? appeared first on The Motley Fool UK.

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John Fieldsend has positions in BAE Systems. The Motley Fool UK has recommended BAE Systems. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Much has been said about the rise and rise of Rolls-Royce (LSE: RR) stock in recent years. The staggering returns – up over 15 times since 2022 – have come on the back of earnings beat after earnings beat from brilliant performance across the company.

The jewels in the crown are perhaps Civil Aerospace (manufacturing and servicing engines for passenger planes) and Defence (providing engines and other power systems for military vehicles).

But what gets less spoken of is the firm’s green energy credentials. The possibility of SMRs (small nuclear power stations) becoming viable for widespread electricity generation is one feather in the cap here. But a recent announcement has underlined that nuclear might not be the only string to the Rolls-Royce clean energy bow…

Flagships

So what happened? Rolls-Royce has started building an energy storage facility in Scotland. These facilities are designed to hold the electricity generated from wind or solar power to be used when the wind isn’t blowing or the sun isn’t shining. This kind of energy storage is sorely lacking at the moment. Bizarrely, colossal sums of money are spent turning off wind power generation – as much as £1.5bn in 2025!

The electricity infrastructure overhaul the UK is currently going through needs many of these sites. And in fairness, many have been built by other companies and organisations. But this is the first by Rolls-Royce, and it is hoped it will be a flagship of sorts to be followed by many more.

Perhaps most pleasingly, the device will be online later this year and fully operational by 2027. The quick startup combined with a proposed 15 years of maintenance both sound good to me. And it’s nice to hear that Rolls-Royce is making use of Scottish supply chains too!

Grand scheme

Is the news a total game-changer? Not really. It’s easy to forget what a massive company Rolls-Royce is these days – over £100bn in market cap and the fifth biggest on the FTSE 100! These kind of announcements simply don’t move the needle like they might have a few years ago when it was a £5bn company.

Likewise, the facility itself is not large in the grand scheme of things. The capacity is 86MWh – enough for 10,000 homes. The UK as a whole has 13,000MWh and the current project pipeline should see that to grow to 127,000MWh. This one site is a drop in the ocean.

The way I’m looking at it? This is more good news coming out of a company that has made a habit of releasing good news. And there’s a possibility that the production of these sites becomes a serious income stream in the years to come. I think the stock is worth considering.

The post Is Rolls-Royce stock quietly turning into a green energy play? appeared first on The Motley Fool UK.

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John Fieldsend has positions in Rolls-Royce Plc. The Motley Fool UK has recommended Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Wizz Air (LSE: WIZZ) shares have had a crazy few days. On April 8, when the Iran-US ceasefire was announced, the share price rose 16% in a single day. It was the biggest winner across the FTSE 350. A £5,000 stake would have turned into £5,813 inside a day, although it has since dropped to £5,536.

But with the good news rolling in, it got a few investors wondering whether this was a golden chance to buy one of the UK’s cheapest shares. The price-to-earnings (P/E) ratio is sitting at a hard-to-believe 3.38. Let’s take a look at whether that tiny P/E is a no-brainer bargain or too good to be true.

Proximity

Let’s begin with that P/E ratio. Three is almost ridiculous. The FTSE 100 average is 18, so in comparison to an average Footsie stock, you’re getting nearly six times as much profit for every £1 in share price you buy. What’s going on here?

The basic answer is that Wizz Air is not a company with a long history of reliable earnings. The firm made a loss in financial years 2022 and 2023, then made a profit in 2024 and 2025.

We can see further evidence for a lack of stability here in the analyst ratings. At the top end, one analyst is predicting a £25 share price target for the next 12 months – a 162% increase. At the bottom end, one analyst is forecasting £5 – a 45% decrease.

Another factor is that Wizz Air is more affected by issues in the Middle East than most. It’s an ultra-low-cost airline from Hungary – think the easyJet of Eastern Europe – and its proximity to the conflict means there are more routes that will get cancelled while the airspace is closed.

Big question

So here’s the big question: is this a good stock to buy? Should investors be snapping up dirt cheap Wizz Air shares or are these to be avoided at all costs?

The first thing to point out is to expect no miracles in the short term. The Iran war has already administered a £50m hit to the firm’s finances and the latest forecasts suggest it will be loss-making for the next two years. In other words, there might not be a P/E ratio to look at in 12 months time because there’s no ‘E’ (earnings) part of that equation.

On the other hand, it’s times like these when all seems disastrous that can end up being the best times to buy. Airlines were in crisis too in 2022 after the pandemic struggles combined with rising inflation and fuel costs. Someone buying British Airways owner IAG in the middle of that mess would have seen the shares quadruple in value since.

My decision? I won’t be buying. I have a little exposure to the airline industry already. And I’m not interested in adding more given all the risks. I’ll say that it will come as no shock if Wizzair goes on a tear in the years to come however.

The post £5,000 invested in Wizz Air shares 2 days ago is now worth… appeared first on The Motley Fool UK.

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John Fieldsend has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

You would be forgiven for wondering what American businessman Elon Musk has to do with the FTSE 100. His largest company Tesla is listed across the pond and has little interaction with any of the businesses listed in London. His social media company, X, is private and so is not listed on any stock exchange anywhere.

Nevertheless, there is a FTSE 100 stock that has been booming in recent years on the back of the success of Musk’s space exploration firm SpaceX. And Scottish Mortgage Investment Trust (LSE: SMT) could be about to receive another huge plus from the billionaire later this year…

Exciting stuff

So what’s the story here? Basically, Scottish Mortgage is an investment trust composed of shares in many exciting high-tech enterprises. The most interesting one, in my view, being SpaceX, which is currently unavailable on the public market. SpaceX’s success has pushed Scottish Mortgage shares up by 60% in the last year. It now makes up a fifth of the overall portfolio.

Here’s where it gets interesting. SpaceX is set to IPO later this year with a reported valuation of $1.75trn. That could make it the biggest initial public offering in history. What’s more, any increase in the share price could send Scottish Mortgage shares into orbit.

It’s worth saying at this point that while Musk is CEO and figurehead, there are over 15,000 other employees too. These are some of the best and brightest minds working on the new space age. And it’s fair to say they’re doing a pretty good job.

How good? Well, no one sends more into space when measured by payload. And that’s not compared to any other company or even any other country – that’s everyone. Here’s an even better stat: SpaxeX has sent more mass to orbit than anyone else in the entire history of space launches!

Eye-watering

What are the risks? Well, this is a nascent industry. No one is making tons of money from this kind of endeavour just yet. And much of the money that comes into the firm is from government contracts.

In 2025, SpaceX is reported to have made $8bn in earnings and $16bn in revenues. Comparing those figures to the potential $1.75trn valuation, we get a price-to-earnings ratio of 218 and a price-to-sales ratio of 109. Those are eye-watering figures that would be practically uninvestable in a more mature business.

Likewise, investing in Scottish Mortgage is not just about one company. The firm invests in other exciting companies such as Ferrari, Amazon, and TikTok-owner ByteDance. SpaceX could have an all-timer of an IPO this year and Scottish Mortgage could still struggle if the rest of its portfolio does.

Overall? I’d not like my entire portfolio to invest in high-risk growth companies like SpaceX, but I think they’re certainly worth mulling over for a small part of a balanced portfolio. For that reason, I think Scottish Mortgage shares are worth considering.

The post Is Elon Musk about to send this FTSE 100 stock into orbit? appeared first on The Motley Fool UK.

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John Fieldsend has positions in Scottish Mortgage Investment Trust Plc and Tesla. The Motley Fool UK has recommended Amazon and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Lloyds (LSE: LLOY) shares were stuck in the doldrums for years. An investor buying in during 2010 would be down on the stake 14 years later. There weren’t even any dividends paid until 2015 – a hangover from the Great Recession when banks of all shapes and sizes were slashing payouts to shareholders.

In 2024, the reversal of fortunes was stark. The share price kicked into gear, doubling in the space of two years or so. The cash was available to pay some chunky dividends too. Anyone buying around the 40p mark in the early months of that year is forecast to receive a 4.2p dividend over the next 12 months. That’s over 10% as an effective yield. Quite the contrast, isn’t it? So what changed?

Consequences

The biggest factor was the increase in interest rates. The Bank of England set interest rates at less than 1% for much of the 2010s – also called the ZIRP (zero interest rate period) era. Then the interest rates shot up in 2022 to counteract rising inflation.

Why was this good for banks? Because it gave them more flexibility. When borrowing costs are higher, there’s more wiggle room between the rates banks lend at and what they borrow at. Higher margins mean higher earnings. And that tends to result in increased dividends and money for buybacks, which puts upward pressure on the share price.

Here’s where things get interesting. The interest rate was supposed to fall slowly from the high of 5.25% to the Bank of England’s target of 2% as inflation fell with it. Not only have rates been falling more slowly than expected, but the consequences of the war in Iran have meant that markets are now expecting a rate hike in 2026 instead.

In other words, the boom times might not be over for the banking sector and the current 96p share price might possibly turn out to be just as good a buy as when it was 41p in 2024.

On a sixpence

There are risks here too. The conflict in the Middle East could change on a sixpence. On the day that I write (8 April), the parties have agreed to a two-week ceasefire. If that stands and turns into lasting peace (which of course we’re all hoping for) then the whole situation around interest rates and inflation could change.

Another danger is the possibility of a windfall tax. The banking sector is right in the crosshairs when profits rise. And a windfall tax had already been mooted last year (although it didn’t happen in the end). That the oil and gas industry had a tax applied in 2022 could be a sign of more sector-specific taxes to come.

On balance? We live in such interesting times that it’s hard to say which way things are going to go. I think Lloyds shares are worth considering nonetheless.

The post Is April 2026 a great time to buy Lloyds shares? appeared first on The Motley Fool UK.

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John Fieldsend has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Many have been eyeing up Diageo (LSE: DGE) shares, since they lost 50% in value, as perhaps one of the FTSE 100‘s best value stocks. I remember reading a lot of bullish predictions around the turn of the year. The new CEO ‘Drastic Dave’ was in and ready to ruffle a few feathers; the popularity of drinks like Guinness and Johnnie Walker would endure. The time to buy was now when the shares were at their cheapest.

What has happened since? The share price fell yet further, down 13% from the beginning of the year. That could mean April 2026 is simply an even more undervalued entry point, or it could mean the shares are nothing more than a falling knife – not something you want to catch hold of. Here’s what I think.

Consequences

It’s hard to discuss any stock this spring without mentioning the conflict in Iran. There’s good reason, too. There aren’t many companies across the world that won’t be affected by the blocked shipping lanes, rising cost of energy and insurance, and the consequences of inflation up and down the supply chain.

Inflation is the last thing Diageo wants after its recent struggles. For context, the latest sales figures suggest that folks are buying cheaper spirits, the problem especially pronounced with the white spirits (or baijiu) it sells in China.

This is at odds with the ‘premiumisation’ strategy the firm has been gunning for. Essentially, Diageo has been targeting the top end of the market while consumers have been shifting to the bottom end.

Fresh inflation worries might exacerbate these problems. And that’s a real risk if the conflict persists for much longer. This is one reason why the share price has been falling this year.

The case

How are things looking now then? Well, bargain hunters will notice that the forward price-to-earnings ratio has now dropped to around 11. That’s well below the FTSE 100 average and less than half the P/E ratio of 25 that Diageo had been trading at only a couple of years ago.

Such a cheap valuation suggests threats on the horizon or a company in decline. Which is the case here?

It’s true that concerns around lower alcohol consumption have been one of the causes of the firm’s malaise. The biggest risk is probably that the recent shift away from booze among Gen Z and those taking weight-loss drugs accelerates. These type of macroeconomic factors can worsen the plight of even the best-run businesses.

On the other hand, revenue and earnings haven’t been hit hard yet. That’s why the P/E ratio is looking so attractive – Diageo is still making a lot of money. And the latest forecasts suggest sales will grow in all regions over the next two years. I think the stock is worth considering.

The post How are Diageo shares looking in April 2026? appeared first on The Motley Fool UK.

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John Fieldsend has positions in Diageo Plc. The Motley Fool UK has recommended Diageo Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The new financial year has begun, and many of us are taking a fresh look at our Stocks and Shares ISAs. These investment accounts allow Britons to invest in thousands of companies in the UK and abroad at the touch of a button. As in every financial year, there will be many stocks that surge in the months to come. But following the recent stock market correction, there could be an abundance of undervalued opportunities to pick from this April.

With the financial year taking us through to 2027, let’s take a look at a thematic £2,027 monthly passive income goal. How much do we need in an ISA to reach that kind of income? And what stocks might be well-placed to take us there?

Drip-feeding

Let’s start by saying that £2,027 every month is nothing to sniff at. It’s a tax-free income higher than the pension and the minimum wage. And the amount required in a Stocks and Shares ISA (assuming we withdraw at 4% a year) is £608,100.

That’s crazy money, really. But here’s the thing. Generally folks don’t chuck in over half a million all at once. The money is drip-fed slowly over the years from a day job. This is actually better too because it allows investments to grow and the amount of cash to be stumped up far less. Most investors who end up with £600k in an ISA won’t have put in anywhere near that much.

How much? Well, over an investing timeline of 30 years and assuming 10% returns then that’s £294 a month. Assuming 8%? That’s £432 a month, and the lower the return rate, the more needs to be invested. There are no guarantees, of course. But the figures sounds a lot more reasonable, and could even be less with good investments.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

One to consider?

One area I’ve been keeping a close eye on lately is mining. The sector hasn’t performed too well of late, but I think there is a fair chance for a company like Rio Tinto (LSE: RIO) to outperform in the years ahead. That could make it a good stock for a Stocks and Shares ISA.

Why? Well, mining is a notoriously cyclical sector, which means booms and busts are par for the course. After a few fallow years, the Rio Tinto share price rising 30% in the last six months could be the start of a surge.

The company is pivoting towards green energy commodities like copper and lithium. As the world embraces cleaner energy sources like solar panels or wind turbines, these have a chance of being the metals of the future.

There are risks here too. The firm’s cash cow is iron ore, which brings in large sales from China and especially its construction sector. A slowdown in the Asian giant’s economy could make this a poor investment whatever the company itself is up to.

No one can ever predict ahead of time what a new financial year will bring. But if history is anything to go by, then there will be more than a few stocks that rip higher over the period. Perhaps Rio Tinto will be counted in their number.

The post How much do I need in a Stocks and Shares ISA to reach a £2,027 monthly passive income? appeared first on The Motley Fool UK.

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John Fieldsend has positions in Rio Tinto Group. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Rolls-Royce (LSE: RR.) shares had one of their best days ever last week. On 1 April, the firm added over £5bn in market capitalisation within 24 hours. The share price move of 6.6% was more akin to a super-volatile penny stock, not one of the FTSE 100‘s largest companies.

What caused the one-day surge? And is it a sign of things to come for the stock? Or is this simply a one-off event that investors should shrug off?

Impact

To explain what happened, we first need to unravel the impact of the conflict in Iran. The 2026 war is affecting companies all over the globe, but few so peculiarly as Rolls-Royce.

On the surface, the heightened tensions might boost the firm’s Defence division. Other British defence stocks like Babcok and BAE Systems have seen an uplift in recent months too.

But the greater issue for Rolls-Royce is the impact of the war on civilian flights and, to a lesser extent, the economy and inflation. A prolonged conflict (along with pricier jet fuel) means fewer flying hours – and that means less cash coming in for maintenance on the engines it sells. A weakened global economy and rising inflation hurt too. This is why the share price is down 19% since the start of the conflict.

That’s why one of the main reasons for the single-day surge was the ‘Trump effect’ of suggesting the war could come to a close soon. The president hinted the war might be ending in the near future (and let’s hope he’s right on that front).

There was more good news on the day as well though…

Notable developments

Another development to note was an order that Rolls-Royce called “one of the largest military orders in the company’s history”. The basic details are that Rolls-Royce will be supplying power packs for 200 personnel carriers for the German military. Such vehicles need reliable power in the most demanding conditions, and that’s where the company’s hi-tech engineering comes in.

This has just been one of a long string of defence orders in recent months for Rolls-Royce. I think it demonstrates two things. Firstly, that governments are starting to get serious about making good on spending commitments to increase the size of their militaries in response to growing threats. And secondly, that the FTSE 100 engineering firm could be set to benefit for years.

I think it’s worth mentioning the boost was also coming on the back of a number of recent broker upgrades and perhaps even the brilliant full-year results in February.

To sum up? It was a great day last week for Rolls-Royce shares, but long-term investors should be looking at longer periods. I think this stock could be one to consider buying for many years and decades.

The post How did Rolls-Royce shares add £5bn in market cap in one day? appeared first on The Motley Fool UK.

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John Fieldsend has positions in BAE Systems and Rolls-Royce Plc. The Motley Fool UK has recommended BAE Systems and Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The big story around BAE Systems (LSE: BA.) stock in recent months has been the impact of the conflict across the Middle East. On the back of the world growing ever less peaceful, governments are ploughing billions into defence spending and technology. The FTSE 100 defence firm is Europe’s largest defence contractor and has had investors flooding in. Someone buying the stock only last December has already enjoyed a 42% return!

There might be yet another twist in the tale too. That’s because BAE Systems has just announced a new “strategic partnership” that aims to bring artificial intelligence into the picture. Here’s what happened.

The news

It must first be said that introducing technology into warfare – like warfare itself – is nothing new. Whether it’s chariots, longbows, tanks or missiles, new developments are a vital part of projecting strength. It should come as no surprise that militaries are starting to use AI.

I also need to point out that the nature of the investment is one to think about before diving in. This is a company that produces weapons. While the counterargument is that a country’s safety and security hinges greatly on its ability to defend itself, this is the kind of stock that may not appeal to many on ethical grounds.

With that out the way, what’s the news? On 26 March, BAE Systems announced a “strategic relationship agreement to accelerate the development and fielding of advanced artificial intelligence capabilities” with Scale AI – a San Francisco-based AI firm.

The collaboration is aiming to use artificial intelligence’s qualities – such as synthesising large amounts of information much faster than a human can – by incorporating them into existing and future products. One example given was target recognition, like vehicles spotting enemy drones accurately and rapidly. As one BAE Systems spokesperson said: “Modern warfare is won at the speed of data.”

Worth it?

Is this single deal going to see the BAE Systems share price rapidly shoot up? Unlikely. The shares are up 10% since the announcement and there are plenty of other factors that might have made an impact there. Likewise, there’s a danger that this could be a bout of ‘trend-chasing’ where companies go after the shiny new thing because it sounds good to the markets, rather than what’s good for the company as a whole.

I think this is better seen as a sign of where BAE Systems is looking – forward. It’s forward-thinking companies that tend to do well in this sector. Take a look across the Atlantic and we can see Palantir, which has used AI for military purposes – the shares are up over 500% since 2024. Another example is virtual reality specialist Anduril, which is set for a show-stopping $60bn IPO in the near future.

On balance? I think this is just another good move from a company that’s already benefiting from worldwide shifts in government spending. I feel the stock is worth considering.

The post Is BAE Systems the FTSE 100’s newest AI stock? appeared first on The Motley Fool UK.

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John Fieldsend has positions in BAE Systems. The Motley Fool UK has recommended BAE Systems. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.