In a building in Costa Mesa, California, engineers wearing fleece vests pass autonomous fighter aircraft prototypes on their way to lunch. It doesn’t resemble Bethesda or Arlington, where slow elevators and the faint scent of mahogany are still prevalent in defense contracting. Nevertheless, a significant portion of America’s upcoming war machine is being developed here. It’s difficult to ignore how rapidly the geography of defense has moved west as you watch this develop over the last two years.
It is nearly impossible to comprehend the numbers themselves. For fiscal 2027, the Trump administration has proposed a defense budget of about $1.5 trillion, up from roughly $1 trillion the previous year. It’s not a bump. The entire industry is being repriced. Even Wall Street has begun rewriting its sector models, despite the fact that Boeing, Lockheed Martin, RTX, and Northrop Grumman still control 92% of Pentagon contracts.
The most obvious beneficiary is Palantir, though the word “obvious” understates how peculiar its ascent has been. Originally designed as a drone imagery tool, its Maven system has developed into something akin to the modern American military’s nervous system. Last year, the company received $1.855 billion from Washington, a 55% increase in federal revenue. Even though the valuation already pricing in a lot of optimism, investors appear to think the runway is still long.
Anduril is taking a similar route, but it feels more founder-driven, aggressive, and swaggeringly similar to Tesla. The Army’s 10-year enterprise deal with the company, worth up to $20 billion, folded more than 120 separate contracts into a single agreement, an unusual gesture from a Pentagon known for paperwork that outlives empires. Speaking with industry insiders, there’s a feeling that, if the rumors are true, Anduril’s IPO will be one of the decade’s most significant listings.
The story becomes more complicated when it comes to the AI labs. After leaving defense work in 2018 due to employee pressure, Google quietly returned in 2025 with a $200 million contract and is currently deploying AI agents throughout the unclassified networks of the Department of War. Although Sam Altman has drawn boundaries regarding surveillance and autonomous weapons that might not hold up under pressure, OpenAI also signed on. Even more bizarre is Anthropic’s predicament, as the Pentagon called it a “supply-chain risk” prior to the resumption of negotiations. The inconsistencies exist and are most likely unresolved.
The way this is affecting the rest of the ecosystem is remarkable. Similar to how they used to hire for SAP or Oracle, defense suppliers of all sizes are now hiring for proficiency in Palantir, Google Cloud, and OpenAI’s stack. OpenAI mentions increased from 41 in 2023 to an estimated 580+ this year, according to job postings monitored by ClearanceJobs. It is not a trend. It’s a tide.
It’s still unclear if the neoprimes will be able to overthrow the giants or if they will just end up being an essential but subordinate layer of the contracting stack. Metal bending was the foundation of the previous defense industry. This one is being constructed using data bending. It turns out that both are profitable. The true question of the coming ten years might be whether they get along.