Silicon Valley bet on war. It’s paying off

SAN FRANCISCO - As the third week of the war in the Middle East continues, intelligence gathered by the Pentagon is being analysed by technology from the artificial intelligence company Anthropic, on a system run by the data analytics firm Palantir.

Drones created by a defence tech start-up in Arizona have emerged as a key piece of the US war arsenal.

And anti-drone systems made by a California start-up have been deployed to protect US forces in the region.

Silicon Valley made risky bets in recent years on developing defence-related technology and providing services to the US military establishment.

Now those bets are paying off. From behemoths providing data systems to smaller companies offering novel weapons, tech firms such as Google, Palantir and OpenAI have found themselves at the heart of the US war effort.

Their central role amounts to an “I told you so” moment. For years, the tech industry’s efforts on defence-related offerings faced scepticism and opposition, with no clear or immediate business rewards.

Many Silicon Valley engineers opposed the use of powerful technologies for killing, battles and other military purposes – concerns that persist.

Despite those fears, venture capital firms have poured billions of dollars since the 2010s into start-ups building drones, lasers and other military systems.

In January, Andreessen Horowitz, which was founded by entrepreneurs Marc Andreessen and Ben Horowitz, closed a new, almost US$1.2 billion (S$1.5 billion) fund to invest in defence technologies.

In recent years, defence tech start-ups often ploughed ahead with weapons prototypes before they had official government contracts.

At the same time, executives including Mr Alex Karp, chief executive of Palantir, and others started cultivating more ties with the government.

Former president Joe Biden welcomed military technology, and President Donald Trump has further embraced it.

In 2025, Mr Trump issued an executive order calling for the military to update its system for acquiring technology so it could incorporate new tools faster. His domestic policy Bill last year allocated US$1 trillion to defence in 2026, including for technology offered by defence tech firms.

Now the war has cemented that work, most likely leading to more business between the tech industry and the military.

In March, OpenAI CEO Sam Altman agreed to take his company’s AI systems onto the Pentagon’s classified networks. Google signed a deal to take AI bots known as “agents” into the Defence Department. On March 13, the US Army said it had awarded Anduril, a defence tech company, a US$20 billion deal for AI-backed software to run on military systems.

“People are pointing to this moment as a proof point,” said Mr Garrett Smith, a former lieutenant-colonel and the CEO of Reveal Technologies, which makes mapping technology for the army.

“It has shown us that in creating and selling these technologies to the US military, we are on the right track. We have made the right investments,” he added.

Pentagon officials said they were excited about how well new technology like AI-related systems had performed in the US-Israeli war against Iran. Two officers who were not authorised to speak publicly said the war was an inflection point in showing how modern technology could work with existing military systems.

But Mr Amos Toh, a senior counsellor at the Brennan Center for Justice, a New York non-profit focused on law and public policy, cautioned that this gung-ho attitude might lead to little oversight of new systems and an over-reliance on just a few tech companies.

The military and the government need “to take a look at the dependencies it is creating,” he said.

OpenAI, Google and the Pentagon did not respond to requests for comment. (The New York Times has sued OpenAI and Microsoft, accusing them of copyright infringement of news content related to AI systems. The two companies have denied those claims.)

Project Maven, an AI-backed system built by Palantir for the Pentagon, is one prominent example of modern technology in the war. Maven works by layering Palantir’s data systems with AI technology from Anthropic. Anthropic’s systems analyse real-time data on battles and other war scenarios, while Palantir’s technology draws conclusions about which targets to strike.

Air strikes hit over 2,000 targets in Iran in the first four days of the war. Many of the targets were selected from a list produced by Maven after it analysed information from drones, satellite imagery and other sources.

On March 12, Palantir’s Mr Karp said in a CNBC interview that AI was giving US forces an edge. Palantir’s stock has soared more than 12 per cent since the war began.

“Our adversaries and enemies are witnessing our ability to fight that they don’t have, and they will find it very hard to acquire. America is the centre of the AI revolution,” he said. Palantir and Anthropic declined to comment.

Technologies from defence start-ups are also being deployed. A system that uses drones to counter other drones, called Merops, developed as a venture project by former Google CEO Eric Schmidt, has become instrumental to protecting US assets in the conflict.

The system, which is small enough to be launched from the back of a pick-up truck, uses AI to seek out and intercept drones before they can reach their targets.

Mr Schmidt’s office declined to comment.

Small and lightweight drones called LUCAS from SpektreWorks, a start-up in Phoenix, have also been deployed in the battlefield.

The LUCAS drones, which mimic Iran’s Shahed drones, are designed for one-way flights. They have been effective in overwhelming missile defence shields and engaging in the type of drone warfare first made popular in Ukraine, a US official said.

SpektreWorks declined to comment on its work with the Pentagon.

In March, US Central Command posted footage of rows of the drones as they were readied to be sent to US forces.

“I’d like to point out that these drones were originally an Iranian design. We took them right back to America, made them better and fired them right back,” said Admiral Brad Cooper, the head of the Central Command. NYTIMES