Counter-terrorism authorities have, for years, characterized keeping up with terrorist organizations and their use of digital tools and social media apps as a game of Whac-a-Mole.

Jihadist terrorist groups such as Islamic State and its predecessor al-Qaida, or even the neo-Nazi group the Base, have leveraged digital tools to recruit, covertly finance via crypto, download weapons for 3D printing and spread tradecraft to its followers, all while leaving law enforcement and intelligence agencies playing catch up.

Over time, thwarting attacks and maintaining the technological advantage over these types of terror groups has evolved, as more and more open source resources become available.

Now, with artificial intelligence – both on the horizon as a rapidly developing technology and in the here and now as free, accessible apps – agencies are scrambling.

Sources familiar with the US government’s counterterrorism efforts told the Guardian that multiple security agencies are very concerned about how AI is making hostile groups more efficient in their planning and operations. The FBI declined to comment on this story.

“Our research predicted exactly what we’re observing: terrorists deploying AI to accelerate existing activities rather than revolutionise their operational capabilities,” said Adam Hadley, the founder and executive director of Tech Against Terrorism, an online counterterrorism watchdog, which is supported by the United Nations Counter-Terrorism Committee Executive Directorate (CTED).

“Future risks include terrorists leveraging AI for rapid application and website development, though fundamentally, generative AI amplifies threats posed by existing technologies rather than creating entirely new threat categories.”

So far, groups such as IS and other adjacent entities, have begun using AI, namely OpenAI’s chatbot, ChatGPT, to amplify recruitment propaganda across multimedia in new and expansive ways. Not unlike the imminent threat it poses to upending modern workforces in dozens of job sectors and is poised to enrich some of the wealthiest people on earth – AI will complicate new public safety issues.

“You take something like a Islamic State news bulletin, you can now turn that into an audio piece,” said Moustafa Ayad, the executive director for Africa, the Middle East and Asia at the Institute for Strategic Dialogue. “Which we’ve seen supporters do and support groups, too, as well as photo arrays that they produce centrally.”

Ayad continued, echoing Hadley: “A lot of what AI is doing is enabling what’s already there. It’s also supporting their capacity in terms of propaganda and dissemination – it’s a key part of that.”

IS isn’t hiding its fascination with AI and has now openly recognized the opportunity to capitalize on what it currently offers, even providing a “Guide to AI Tools and Risks” to its supporters over an encrypted channel. In one of its latest propaganda magazines, IS outlined the future of AI and how the group needs to embrace it as part of its operations.

“For every individual, regardless of their field or expertise, grasping the nuances of Al has become indispensable,” it wrote in an article. “[AI] isn’t just a technology, it’s becoming a force that shapes war.” In the same magazine, an IS author explains that AI services can be “digital advisors” and “research assistants” for any member.

Over an always active chat room that IS uses to communicate with its followers and recruits, users have begun discussing the many ways AI can be a resource, but some were wary. One user asked if it was safe to use ChatGPT for “how to do explosives” but weren’t sure if agencies were keeping tabs on it – which has become one of the broader privacy concerns surrounding the chatbot since its inception.

“Are there any other options?” asked an online IS supporter in the same chat room. “Safe one.”

But another user found a less obvious way around setting off any alarms if they were being watched: by dropping the schematics and the instructions on how to create a “simple blueprint for Remote Vehicle prototype according to chatgpt”. Truck ramming has become a choice method for IS in recent attacks involving followers and operatives, alike. In March, an IS-linked account also released an AI-created bomb making video with an avatar, for a recipe that can be created with household items.

Far-right groups have also been curious about AI, with one advising followers on how to create disinformation memes, while others have looked to AI for the creation of Adolf Hitler graphics and propaganda.

Ayad said some of these AI-driven tools have also been a “boon” to terror groups and their operational security – techniques to securely communicate without prying eyes – such as encrypted voice modulators that can mask audio, which altogether, “can assist with them further cloaking and enhancing their opsec” and day-to-day tradecraft.

Terror groups have always been at the forefront of maximizing and embracing digital spaces for their growth, AI is just the latest example. In June 2014, IS, still coming into the global public consciousness, live-tweeted imagery and messages of their mass executions of over 1,000 men as they stormed Mosul, which caused soldiers in the Iraqi army to flee in fear. After the eventual establishment of the so-called Caliphate and its increasing cyber operations, what followed was a concerted and coordinated effort across government and Silicon Valley to crackdown on all IS accounts online. Since, western intelligence agencies have singled out crypto, encrypted texting apps, sites where 3D printed guns can be found, among others, as spaces to police and surveil.

But recent cuts to counterterrorism operations across world governments, including some by Doge in the US, have degraded efforts.

“The more pressing vulnerability lies in deteriorating counter-terrorism infrastructure,” said Hadley. “Standards have significantly declined with platforms and governments less focused on this domain.”

Hadley explained how this deterioration is coinciding with “AI-enabled content sophistication” urging companies like Meta and OpenAI, to “reinforce existing mechanisms including hash sharing and traditional detection capabilities” and work to develop more “content moderation” surrounding AI.

“Our vulnerability isn’t new AI capabilities but our diminished resilience against existing terrorist activities online,” he added.

While “undervalued” and “overlooked” are two adjectives that aren’t often used to describe AI stocks (they’re normally the opposite), there are plenty of stocks that can take on this moniker. Many times, these are companies that investors assume will be disrupted by the AI arms race but are leaders in their respective fields.

Two that I think fall under this description are Alphabet (GOOG -1.63%) (GOOGL -1.53%) and Adobe (ADBE -0.67%). Both of these stocks are undervalued and don’t get enough credit for the work they’ve already done in the AI field. As a result, they look like strong buys, especially at their current price tags. 

The market thinks both companies will be losers in the AI revolution

Alphabet and Adobe are two companies that everyone assumes will be losers, but they’re also AI leaders in their respective fields. Investors need to examine the likelihood of either company falling behind in the AI arms race rather than making assumptions, as both companies have impressive AI offerings that are often overlooked.

Alphabet is the parent company of Google, and gets the majority of its revenue from the Google Search engine. The market assumes that generative AI models will replace Google Search, but this has not yet come to fruition. In the first quarter, Google Search’s revenue rose 10% year over year. That’s not indicative of a company that’s losing a ton of business from generative AI defectors.

Furthermore, Google has a leading generative AI model in Gemini and is also benefiting from the AI arms race with its cloud computing business, Google Cloud. Google has also implemented AI search overviews, which bridge the gap between traditional Google Search and generative AI models. This combination is likely all that the majority of internet users want from AI, and assuming that Alphabet’s business is going to significantly decline is a gross misvaluation of the current environment.

Generative AI tools can also generate images and video, something that Adobe’s product line has long been a part of creating and editing. If all graphics are created by generative AI, then Adobe’s software becomes useless — at least that’s the bear case.

In practice, generative AI-created images are impressive but don’t offer the exact control that many graphic designers want over the end product. Generative AI will likely take over image creation for some lower-end tasks. Still, when a company wants absolute control over colors, product images, and other design aspects, Adobe’s tools are the best for the job.

Adobe also has its own generative AI model, Firefly. This is an incredibly popular AI tool for designers because it’s optimized to integrate with Adobe’s existing product suite.

Time will tell if Adobe can maintain its competitive edge against generative AI models. Still, with Adobe’s consistent growth quarter after quarter, even with generative AI tools available for use, I think it will be just fine.

ADBE Operating Revenue (Quarterly YoY Growth) data by YCharts

Both stocks trade at a steep discount to the broader market

Compared to the broader market, as measured by the S&P 500 (SNPINDEX: ^GSPC), both Alphabet and Adobe trade at a discount.

GOOGL PE Ratio (Forward) data by YCharts

Both stocks are trading for around 18.5 times forward earnings — far cheaper than the S&P 500, which trades for 23.2 times forward earnings.

This indicates that these two stocks are massively undervalued compared to the broader market. If you think that AI will significantly disrupt both companies, then this valuation likely makes sense. However, if you examine the recent results of both companies and consider the AI tools they are offering, it becomes clear that this assumption is incorrect.

Each stock is an excellent buy at this time.