Al Root
Venture capitalist Marc Andreessen famously said in 2011 that software is eating the world. Now, artificial intelligence is eating software, leaving investors scrambling to find companies that can avoid AI disruption.
Manufacturing is a prime potential beneficiary. Just look at what Ford Motor and GE Aerospace are doing with AI tools.
On the surface, Ford and GE Aerospace don't appear to have much in common. Yes, both are U.S. manufacturing icons with a rich history. But Ford makes millions of cars annually, producing relatively low profit margins in a brutally competitive, slow-growing market. GE Aerospace, meanwhile, has strong profit margins and a dominant market share, making thousands of aircraft engines for a growth market.
Those factors show up in valuation. Ford stock trades for less than eight times earnings expected over the next 12 months. GE Aerospace stock trades for about 40 times earnings.
One thing both companies have in common, though, is a plan to use artificial intelligence to boost profit margins.
GE Aerospace has implemented AI tools for design, monitoring, inspection, and worker productivity. AI is an "accelerator" on GE's journey of continuous improvement, says chief information officer David Burns.
GE Aerospace also has what amounts to its "three laws" for AI. The input data must be trusted, the AI tools must be transparent, and a human needs to be in the loop.
Aerospace is a prime beneficiary of AI, according to Jefferies analyst Sheila Kahyaoglu. It's a technically complex industry with a handful of powerful participants. "High capital intensity, specialized expertise necessary for manufacturing, and the highly regulated nature of aerospace and defense markets are key driving forces of strong barriers to AI disruption," she says. "AI adoption is also driving efficiency gains and enhanced product offerings."
As for Ford, AI is assisting with inspections to improve quality.
Improving quality is Job One at Ford. In 2025, Ford took a $600 million charge for a fuel injector recall. Ford shares also dipped 18% in a single day in late July 2024 after the company missed Wall Street's second-quarter earnings expectations, partly because warranty expenses were up $800 million compared with the first quarter.
That's a lot of money for Ford. The company is expected to generate a 2026 operating profit of about $9 billion.
Ford is also employing AI tools in design functions, including aerodynamic simulations. AI can cut simulation time from 15 hours to 10 seconds, according to the company.
Lower costs might be competed away or traded for a higher market share at Ford, but that process will take a long time to play out. Ford, as a manufacturer, still qualifies as what Goldman Sachs calls a HALO business -- heavy asset, low obsolescence. People will need cars (and planes) for a long time. That makes it less vulnerable to disruption than, say, an enterprise software provider facing an existential threat from tools such as Anthropic's Claude.
Early adoption of AI tools by Ford and GE Aerospace is smart. AI is here, but it's still on the cusp of wider adoption. Only about 20% of smartphone owners currently use an AI assistant. "That is roughly the same amount of PC users that used the internet in 1996," says ARK Invest's Chief Futurist Brett Winton. By the end of 2000, that number was 80%. "The diffusion curve in AI is happening twice as quickly....we think you'll go from basically a billion people using these tools to four to five billion."
That's a consumer example. As for enterprise customers such as GE Aerospace and Ford, ARK measures AI benefits, from increased worker productivity, in the trillions.
The challenge for investors is figuring out who can keep some of that benefit. Car and plane makers are two candidates.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 10, 2026 15:47 ET (19:47 GMT)
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