General Dynamics CEO: Customer comfort with AI will drive sales
Then-Raytheon CEO Thomas Kennedy interviews General Dynamics CEO Phebe Novakovic during the Boston College Chief Executives Club luncheon on June 11, 2019 in Boston. Photo by Pat Greenhouse / The Boston Globe via Getty Images
By
Ross Wilkers
Technology makers and integrators alike all have to invest in artificial intelligence even as "people are careful and they think properly" about AI's path forward, as GD's chief executive described to investors.
Interest being high and progress going slow appears to be the general consensus on where federal agencies are in artificial intelligence, both on the purchasing and adoption fronts.
But technology makers and integrators alike still have to keep their AI investment engines going, so they do not get left behind as government usage gradually ramps up.
During General Dynamics' first quarter earnings call with investors Wednesday, chief executive Phebe Novakovic said customer largely takes the lead to "define what the art of the possible is for them" in AI.
A bulk of the corporation's AI investments play out in its GDIT services business with some others at the Mission Systems hardware unit as well, Novakovic told analysts.
Seeing a return on that investment will take some more time if the current trend line holds on how fast, or slow, agencies buy and implement the technology.
"I think the more comfortable our customer becomes, (that) will ultimately drive some increased revenue," Novakovic said.
"I haven't seen too much of that yet because I think the government is not like unlike other industries where its adoption is: people are careful and they think properly, so I would argue that would be true across the entirety of our business."
At GDIT specifically, AI is one of several "Digital Accelerators" that the business centers its strategy and solution offerings around.
GDIT is also using AI as part of a larger accounting systems modernization job for the Centers for Medicare and Medicaid Services under a potential eight-year, $450 million contract booked in the fall of 2023.
First quarter revenue of $3.2 billion for GD's Technologies segment, which includes GDIT and Mission Systems, was down approximately 0.8% from the prior year period. Operating earnings of $295 million in the quarter were flat.