The artificial intelligence (IA)-implemented armament has globally grown into a key factor providing for strategic balance of powers. Every state pushes for positioning itself as a full-fledged participant in global technological race, in pursuit of economic, and military, and geopolitical advantages in the sphere of AI development. In such conditions, small states (especially those dealing with serious security problems) cannot stand aside, and also strive to replenish their military and military-political arsenal with “smart” weapons or accumulate the necessary potential for their own development and production of AI technologies. However, in terms of small states, the problem becomes noticeably more intricate, since they encounter the need to choose not only between imports and production, but also decide on the area of greater focus on the AI development – civilian or military. The research herein was conducted with the aim of contemplating on the effectiveness of the AI-implemented “smart” weapons production and determining the feasibility for such small states with major security problems like Armenia, investing funds in the development of the local military industry with a focus on the arms imports. One of the important issues is predicting the time to reach such a level of local arms production at which it will be possible to ensure the security of one’s own country. To this end, the author has studied academic approaches to the reallocation of military spending on the production of “smart” weapons, and identified the advantages of AI-based weapons in solving defense and security problems. The findings of the study allow us to conclude that from the perspective of solving defense-security tasks the peculiarities of the geo-economic environment in Armenia require that all the resources be directed towards the development of AI technologies with a focus on their application in the military sphere. That is the only direction the development of which will make room for saving military spending and the most efficient use of the limited budget, as well as modernize the armed forces to the earliest possible time.