For decades, defense investors have leaned on familiar yardsticks to pick winners: contract wins, order backlogs, and the sheer number of platforms rolling off production lines. But Aviv Shapira, CEO of Xtend AI Robotics, Inc. (XTND), thinks those numbers are losing their predictive power as artificial intelligence rewrites the rules of modern warfare.
The industry is shifting from building mostly static hardware to deploying software-defined systems that can learn and improve in the field. That means the companies that thrive won't necessarily be the ones with the biggest factories — they'll be the ones that adapt fastest.
AI Is Changing Defense
When asked what metric investors should be watching five years from now, Shapira didn't mention revenue, production capacity, or contract value. Instead, he pointed to something most investors have never heard of.
"Five years from now, the most important metric will be operational learning velocity," Shapira told MarketDash 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 captures a broader transformation underway across the defense sector. Instead of treating military platforms as fixed assets that get occasional upgrades, companies are increasingly building AI-enabled systems that improve continuously through software updates. That shift changes what actually creates a long-term competitive edge.
Shapira contrasted this emerging view with the metrics investors have traditionally leaned on.
"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 rests on a broader thesis: software, not hardware, is becoming the defining differentiator in modern defense. He described XTEND's XOS platform as a hardware-agnostic operating layer that lets capabilities improve across an entire fleet, rather than resetting every time new equipment is introduced.
That evolution, according to management, means investors may need to look past production scale and focus on a company's ability to rapidly turn operational feedback into software improvements. It's a model that mirrors how software companies compound value through continuous product updates, even though defense manufacturers have historically been judged on manufacturing metrics.
Shapira cautioned that relying on technological superiority alone is getting riskier. "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 keeps 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's already out in the field.
