Founded less than a decade ago in 2017, US defense technology company Anduril has reached a roughly US$90 billion valuation in a recent employee tender offer, placing its private-market value in the same range as, or above, the public-market capitalizations of long-established defense firms such as Northrop Grumman and General Dynamics.
According to a Bloomberg report, Anduril Industries Inc. opened a tender offer allowing its employees in 16 countries to sell shares at a valuation of about US$94.80 each, with the total offer capped at about US$ 1.3 billion. The subscription period is open from October 13 to November 9.
Unlisted companies often offer employees and others a chance to cash out shares they hold through tender offers to retain talent.
Notably, in recent years, AI-focused, venture-backed startups increasingly use tender offers rather than public listings to give employees access to cash.
AI startups such as OpenAI, Anthropic, Clay, ElevenLabs, and Harvey have used employee tender offers to stay private longer while still offering cash incentives to retain talent.
Anduril’s tender offer will push the AI-focused defense company’s valuation to US$90 billion, up nearly 50 percent from its May valuation of US$60 billion.
Beneath this skyrocketing valuation lies the story of how the global defense market, and the U.S.’s famous defense-industrial complex in particular, has transformed beyond recognition in just a decade.
What Anduril’s US$90 Billion Valuation Tells Us
For generations, slow-moving, mammoth defense-industrial houses lobbied for lucrative Pentagon contracts and delivered hardware-centric defense platforms over decades-long procurement cycles.
This system created the U.S.’s distinct politico-military-industrial complex, dominated by legacy prime contractors, including the Big Five: Lockheed Martin, RTX, Boeing, General Dynamics, and Northrop Grumman.
Today, however, venture-backed startups increasingly dominate the U.S. defense market, offering software-defined autonomous weapons systems with AI integration.
In this market, a defense product’s journey from concept to initial operational clearance (IOC) and front-line deployment takes years, sometimes even months, not decades.
For instance, the Zumwalt-class destroyers program traces back to the 1990s Surface Combatant for the 21st Century (SC-21) and DD-21 programs. Construction of the lead ship began around 2009; it was launched in 2013, commissioned in October 2016, and was finally accepted around 2020. The ships have since undergone multi-year modifications to carry hypersonic missiles.
Similarly, the B-2 Spirit program spanned two decades, from the 1970s to the 1990s; the F-35 Lightning II (Joint Strike Fighter) program also took nearly two decades, from early concept work in 1996 to Initial Operational Capability in 2015.
However, venture-backed firms such as Anduril, Shield AI, and Palantir focus on software platforms that can be updated iteratively, often paired with smaller or modular hardware, and use faster acquisition pathways.
For instance, Anduril was founded in 2017. It piloted its AI-powered Sentry surveillance towers on the U.S.-Mexico border around 2018, within a year of its founding, and later made them a program of record, deploying hundreds by the early 2020s.
Similarly, Shield AI was founded in 2015. The company reported deploying its AI autonomy software stack, AI Hivemind, for the first time around 2018, within three years. Hivemind has since operated on dozens of platforms, including drones, F-16s in tests, helicopters, and, more recently, maritime and space systems, in GPS-denied, contested environments.
The Collaborative Combat Aircraft (CCA) programs of these defense AI startups are progressing much faster than the typical two-decade development cycle for traditional fighter aircraft.
For instance, Anduril’s YFQ-44A Fury, a jet-powered, uncrewed autonomous combat aircraft with mission-autonomy software such as Hivemind and Anduril’s own Lattice, is already in testing.
The contrast is stark. While traditional defense platforms were hardware-centric, with development cycles spanning decades, these new software-centric Autonomous platforms emphasize rapid prototyping and continuous software updates, compressing development timelines to years, and even months.
Another advantage of these software-centric defense platforms is that their upgrades also take months, not years, enabling continuous updates.
The war in Ukraine has shown that the modern battlefield is changing every few months.
For instance, FPV drones first appeared in the war in Ukraine around May 2022; by September 2022, Kyiv had introduced maritime drones.
In 2024, Russia countered Ukraine’s Starlink-linked drones with its Fiber-optic drones, which were immune to jamming. By the end of 2024, these drones carried air-to-air missiles such as the R-73 and R-60. Ukraine also armed its naval drones with surface-to-air missiles.
By 2025, Ukraine had developed multiple drone interceptors that reversed the cost-benefit advantage drones had over traditional interceptor missiles.
Russia responded with jet-powered drones that can fly at 500-600 km per hour and is developing others that can exceed 800 km per hour.
This continuously evolving battlefield means traditional procurement cycles spanning decades no longer suit modern warfare, where systems become outdated within months.
A hardware-centric approach can’t meet the demands of this evolving battlefield; therefore, the Pentagon increasingly prefers working directly with Silicon Valley-based AI defense firms.
Anduril’s US$ 90 billion valuation reflects this broader story. Anduril, however, is not the only AI defense firm cashing in on this trend.
Palantir, founded in 2003, is already worth nearly US$480 billion, more than any of the Big Five.
Palantir’s valuation is nearly seven times Northrop Grumman’s, more than five times General Dynamics’, nearly four times Lockheed Martin’s, three times Boeing’s, and nearly double RTX’s.
Similarly, Scale AI is worth US$29 billion, Shield AI around US$13 billion, and SandboxAQ and Applied Intuition around US$15 billion.
“Companies like SpaceX, Palantir, and Anduril have been tapped for multi-billion-dollar contract awards from the Pentagon for communications, targeting, unpiloted vehicles, anti-drone defenses, and hypersonic weapons. The funds from these awards will flow to the companies over time, which should put them in the top ranks of Pentagon contractors by value of awards within the next several years,” a recent report from the Costs of War project said.
What sets Palantir and Anduril apart is that while most AI defense firms have only one product in their portfolios, such as autonomous aircraft, counter-drone systems, or data fusion software, these two firms are offering a range of products.
Anduril offers AI-powered software, autonomous drones, cruise missiles, drone interceptors, Collaborative Combat Aircraft (CCA), underwater drones, undersea sensor networks, autonomous rotorcraft, surface-to-air interceptor missiles, autonomous sensor towers for land, water, and sea, radars, infrared imaging, and more.
Earlier this month, Anduril won a contract worth up to US$2.9 billion with the U.S. Navy to boost submarine production. The company is also investing US$3.7 billion to scale a new shipyard in Maryland. The new facility will build components for the Virginia-class submarines.
Anduril co-founder Palmer Luckey was also selected to lead “Project Meridian: The Future of Warfare,” a new 120-day initiative tasked with identifying the technologies and capabilities needed for future military dominance.
Anduril has also been selected to build the next generation of Army goggles, the Integrated Visual Augmentation System (IVAS), which are “intended to give soldiers everything from night-vision capability to warnings of incoming airborne threats.”
However, Anduril’s most lucrative contract could be in border security technologies. The Big Beautiful bill commits over US$6 billion for various border security technologies. However, as Eurasian Times reported earlier, the bill’s conditions mean Anduril is the only firm that qualifies for these border surveillance tenders.
Anduril has also been called the Nvidia of the US defense market.
The sky-high valuation of Palantir and Anduril will also have a knock-on effect on other Silicon Valley-based AI-defense firms.
If these new tech defense firms maintain their growth momentum for another decade or so, then we might have to redefine the ‘Big Five’ of the US defense market.
- Sumit Ahlawat has over a decade of experience in news media. He has worked with Press Trust of India, Times Now, Zee News, Economic Times, and Microsoft News. He holds a Master’s Degree in International Media and Modern History from the University of Sheffield, UK.
- He can be reached at ahlawat.sumit85 (at) gmail.com
