Iran war speeds tie-up between tech start-ups and US military
PARIS
The Mideast war has highlighted the newfound alliance between the tech sector and the U.S. military after decades of strained relations, displaying a synergy that investors see as a potential gold mine.
For the first time, the usual military-industrial pillars like Lockheed Martin and Boeing are being joined by rising tech giants Palantir, Anthropic and Anduril in helping to keep the U.S. war machine ticking.
Tech firms are increasingly involved in helping the military with everything from cloud computing to AI-powered drones.
Maven, Palantir's data analytics platform, has been used extensively in the offensive against Iran, as has Anthropic's artificial intelligence.
Anduril's president, Matthew Steckman, said on March 23 that it was providing "one of the main defense systems" against Iran's low-cost, long-range Shahed drones. The company recently announced a 10-year, $20 billion contract with the U.S. military.
Palantir's chief Alex Karp called the developments "a huge shift in Silicon Valley."
"When we started Palantir," he said this month, "we couldn't get funding" because the company was still too focused on civilian applications for its technology.
Employee revolts at Microsoft, Amazon and Google in the late 2010s helped kept those giants out of the military market. Google ended up relinquishing the Maven contract in 2018, with Palantir getting onboard in 2024.
But times have changed.
Investors and tech companies have now "moved from being hostile to skeptical to neutral, from neutral to positive on the idea that Silicon Valley, like every other part of industry has to support the war fighter," Karp said.
In 2025, private equity invested a record $49 billion in defense technology companies, nearly double the previous year's $27 billion.
That shift relates to Russia's invasion of Ukraine and worries about China's ambition to take over Taiwan, said Merritt Ogle, chief operating officer at the Silicon Valley Defense Group, which promotes closer ties between the two sectors.
"When you start to think about protecting democracy and protecting freedom and protecting things that I think a lot of the countries that are allied with the U.S. appreciate," she said, the concept that "all defense is bad becomes a harder argument to make."
Generative AI technology has revived some concerns, however.
Anthropic has refused to allow its systems to be used by the Pentagon for mass surveillance, prompting the Trump administration to brand the trailblazing company a "supply chain risk" — even as Anthropic's AI systems continue to be used for fighting in the Mideast.
Behind the shift has been a wider recognition among military and political leaders that the U.S. "needs to tap into a broader innovation base for national security," said Mark Valentine, head of defense strategy at Skydio, a maker of autonomous drones.
Funding has never been an issue for the U.S. military, which has the world's largest defense budget by far, amounting to $962 billion for the 2026 fiscal year.
Almost all of that funding has historically gone to the usual major suppliers.
For about a decade, under both Republican and Democratic administrations, the Pentagon has launched numerous initiatives to foster the development and adoption of new technologies.
"There's a broader understanding that maintaining a technological edge depends on integrating the best capabilities and doing it faster than we have in the past," Valentine said.
Several programs have been initiated to strengthen ties with the private sector, and "the government has seemingly shown a lot more appetite to support earlier stage companies," said Drew Wandzilak, principal of the strategic tech fund at the private equity firm Alumni Ventures.
The widespread use of drones and missiles in the Ukrainian conflict and the Mideast war has shown that having "the most expensive, most exquisite system was no longer a differentiator," Wandzilak said.
"It's a volume game, and so there's competition on volume, there's competition on capacity. And I think ultimately it's a mix of the two."
Ogle noted that signals sent by the government had encouraged technology companies outside the defense sector to envision military applications for their products.
"It has allowed Americans and people who work in this ecosystem to feel more excited about it, and more open to the idea that we're not just making bullets here," she said.