Anduril: Building the Next-Generation Defense

Anduril Industries has become one of the most talked-about defense technology companies in the world. Founded by Palmer Luckey, best known for creating Oculus, the company is redefining how modern warfare and national defense are built. While the old guard of defense primes moves slowly through traditional contracts and bureaucracy, Anduril operates more like a Silicon Valley startup—fast, software-first, and vertically integrated.

The company’s thesis is simple but revolutionary: the next era of deterrence will be defined by autonomous systems that can think, communicate, and adapt faster than any human-operated weapon. Anduril wants to be the prime contractor for that future.

The Core Product: Lattice OS and a Networked Military

At the heart of Anduril’s ecosystem is Lattice, its proprietary AI command and control software. Lattice fuses data from sensors, drones, radar, and battlefield feeds into one operating layer that can coordinate everything from surveillance to counter-UAV defense.

Every product Anduril builds runs on this backbone. The company manufactures its own unmanned aerial systems such as the Ghost drone, autonomous underwater vehicles through its acquisition of Dive Technologies, and the Roadrunner air-defense interceptor. With its Adranos acquisition, Anduril now produces tactical rocket motors—placing it in direct competition with Raytheon and Northrop for munitions contracts. That vertical integration gives Anduril both manufacturing control and leverage in an industry known for supply bottlenecks.

Macro Tailwinds and Market Context

The geopolitical environment of 2024 and 2025 has accelerated defense spending around the world. From the war in Ukraine to rising tensions in the Indo-Pacific, governments are demanding more drones, more automation, and faster procurement cycles. The U.S. Department of Defense has stated that attritable, AI-driven systems will be central to future air and missile defense.

This environment plays directly into Anduril’s strengths. The company’s technology allows militaries to deploy hundreds of inexpensive, networked systems rather than a handful of billion-dollar aircraft. It is a philosophy that mirrors how modern computing evolved—from mainframes to distributed networks—and it aligns with global spending trends favoring volume and adaptability.

Financial Performance and Valuation Growth

Anduril has achieved the kind of growth rarely seen in defense. In mid-2025 the company raised a Series G funding round that valued it at roughly $30.5 billion, doubling its valuation from the previous year. Industry estimates place annual revenue at around $1 billion, with continued triple-digit growth as new production contracts come online.

The company’s revenue base is still primarily government-driven, but the diversity of programs—from counter-UAS to missile propulsion—gives it insulation from single-program risk. New manufacturing sites in Ohio and Mississippi indicate that Anduril is transitioning from prototype contracts into mass production, which will further stabilize cash flow and margins.

How Investors Can Gain Exposure

At present, Anduril remains private, which limits direct access to most investors. Venture firms, sovereign wealth funds, and major institutional players dominate the cap table. However, secondary marketplaces occasionally list employee shares or early-round allocations. These transactions often carry steep premiums and illiquidity risk, so investors should carefully review provenance and restrictions before committing capital.

For public-market investors, the alternative is to gain indirect exposure through suppliers or defense ETFs that include Anduril’s collaborators and competitors. Companies involved in radar systems, solid rocket motors, or autonomous manufacturing will benefit from the same demand surge. Another strategy is to invest in dual-use technology funds focused on AI, aerospace, and advanced manufacturing—many of which hold stakes in Anduril or similar private defense startups.

Valuation Framework and Investment Thesis

Anduril sits between a software company and a traditional defense manufacturer. A pure SaaS multiple doesn’t apply because hardware and manufacturing remain integral to its model. Yet valuing it like an old-line defense contractor underestimates its scalability and data-driven margins.

The most accurate approach blends the two: assign higher multiples to its software and autonomy services, and lower multiples to its production lines. Over time, as more of Anduril’s systems use the same Lattice OS, recurring software revenue will become a larger share of total revenue—potentially pushing the company toward a software-driven valuation profile similar to Palantir’s government division.

The key metrics to watch are backlog growth, production ramp success, and Lattice adoption across allied forces. If these continue to rise, Anduril could justify valuation multiples closer to tech leaders than legacy defense primes.

Key Risks and Challenges

The bullish case depends on Anduril continuing to navigate complex government procurement systems. A shift in political priorities, continuing resolution gridlock, or export-control restrictions could slow revenue recognition. Competition from incumbents such as Lockheed Martin, Northrop Grumman, and Boeing will intensify as those firms rush to modernize their own AI and autonomy platforms.

The expansion into solid rocket motors also introduces industrial risk. Scaling manufacturing while maintaining reliability and safety standards is capital intensive and leaves little margin for error. Investors should also remember that defense startups face long payment cycles and contract delays, which can strain cash flow even in a high-growth environment.

The Long-Term Outlook

Despite those risks, Anduril’s momentum appears sustainable. The company has government backing, a strong balance sheet from its latest funding round, and a suite of technologies aligned with emerging defense doctrines. Over the next five years, Anduril could evolve into a publicly traded defense prime that merges Silicon Valley speed with defense-grade reliability.

For investors, the company represents more than just another startup—it represents the modernization of a trillion-dollar sector that has been technologically stagnant for decades. Whether through private-market exposure, strategic funds, or eventual IPO participation, Anduril is a name to keep on the radar for anyone serious about the intersection of technology, autonomy, and global security.