The Breakdown: Anduril

Inside Anduril: From a Facebook reject to the fastest growing defense company in history.

Autonomous fighter jets, AI systems that track border crossing and cutting-edge robotics. Anduril is one of the hottest and most controversial private companies in a cutthroat market. But controversy doesn’t slow growth and competition spurs innovation.

In 2014, Facebook acquired a VR headset company called Oculus.¹ Founded by Palmer Luckey, a young 22-year-old CEO, it was a massive deal that valued the VR startup at $2 billion. But then, in 2017 following a political controversy, Palmer was fired by Meta. Instead of sitting back and retiring as a 25-year-old worth $700 million, he decided to found Anduril, a company that within two years achieved unicorn status.²

There aren’t many companies that have their revenue go from $5 million to $2.2 billion in the span of less than a decade. Anduril is one of them. And the valuation has responded accordingly. What was once a small defense company less than a decade ago, is now a defense powerhouse valued at $61 billion.³

By way of a roadmap this piece will begin by explaining a brief history of Anduril before explaining what the company does. We will then cover competition, their leadership and the ethical questions surrounding Anduril. We will finish taking a look at where the money is, try to give a valuation framework with which to view the company and discuss potential plans for an IPO. Finally, I will summarize and give my final thoughts. By the end of this piece, you will have a comprehensive understanding of Anduril, the bull cases, headwinds and everything needed to know for those interested in investing in the fastest growing defense company ever.

The Birth of Anduril:

How can you design the most high-end Swiss watch of a weapon.
Brian Schimpf - CEO of Anduril

Palmer Luckey was not a regular teenager. Instead of playing video games, he was building things in his garage. In 2012, at the age of 20, he founded Oculus, a VR headset company. Two years later, he sold it to Facebook for $2 billion. Palmer then worked at Facebook for three years, before a secret donation to a PAC that funded “meme magic” attack advertisements against Hillary Clinton was leaked.⁴ Facebook pressured Luckey to say that he was a supporter of the then libertarian candidate Gary Johnson in order to make it less controversial.

At the same time, Oculus was sued for hundreds of millions of dollars by ZeniMax for stealing virtual reality secrets.⁵ The court ruled against Oculus, and they were forced to pay hundreds of millions of dollars in damages.

By the time the dust settled, Palmer was out of Facebook. Palmer maintains that he was pushed out of the company due to his political support. Zuckerberg and Facebook officials meanwhile, have repeatedly stated and even testified under oath that Palmer’s firing was not the result of his political beliefs.⁶ Facebook and Luckey eventually settled for a deal upwards of $100 million in cash and stock compensation.⁷ Either way, Palmer was out and hungry to prove those in Facebook wrong.

Less than three years later on January 1st, 2017, Anduril was founded. The original founders: Palmer Luckey, three Palantir employees and the former hardware lead at Oculus.

What does Anduril do?

Anduril was started as a defense program with the goal of transforming defense capabilities with advanced technologies.⁸ Anduril also has a unique payment structure, upfront deals, no payment unless they procure a valuable product that is worth paying for.

Anduril’s used a mix of artificial intelligence mixed with sensors and databases in order to maximize efficiency. By combining modern day software with classic hardware, they would be able to create weapons that were more accurate, precise and deadly. In 2018, they launched their first product, a software used by border patrol agents to detect unauthorized border crossings.⁹

Anduril’s real moat comes from their software Lattice. It is essentially the central brain of all Anduril’s products. Lattice gathers sensory data from its different hardware assets and uses AI to turn this raw data into a real time picture and actionable insights. This combination of data and artificial intelligence sets Anduril apart and gives its handlers a distinct advantage over adversaries.

"Say I had a perfect AI system that could tell me where every ship, aircraft, and soldier was in the world. Now I know everything. That is overwhelming. The promise of AI is pulling out that signal from just this overwhelming amount of information that exists... so we can have humans with much better context." Brian Schimpf, Anduril CEO.

In the years that followed they continued growing the product, scaling both in size and sophistication. Their software program Lattice continued improving and signed key defense contracts with the US army and Airforce. Next, they began targeting hardware, producing different types of drones. First came the defensive reusable Roadrunner, next came Altius, an autonomous drone that can hunt its target for up to four hours.

Today, Anduril is building the next level of weapons including surface launched cruise missiles, autonomous submarines and even an autonomous fighter jet.¹⁰¹¹

TAM and Competition:

Before looking at Anduril’s competition, it is important to identify their total addressable market (TAM). The US spent roughly $916 billion on national defense spending in 2025.¹² Assuming Anduril’s TAM includes US allies as well, that budget number rises to around $1.6 trillion.¹³

But that isn’t an entirely accurate picture. 46% of the US military budget doesn’t go to contractors like Anduril. It goes to US soldiers, construction, maintenance and other things. From the remaining 54%, 30% of it goes to the “big five”.¹⁴ The majority of what is left over goes to services, fuel, oil, shipyards and IT services. Finally, a tiny sliver is leftover for advanced defensive companies. Assuming that the TAM is 1% of the $1.6 trillion budget, it comes out to around $16 billion leftover for Anduril to share with other defense tech companies like Palantir and Saronic.

If this is Anduril’s TAM, they will essentially have two main options long term in order to continue with their growth.

1. Pivot out of defense and move into the private sector.

2. Try and break into one of the big five and try becoming a new addition to the legacy defense companies i.e. Lockheed Martin, Boeing etc.

Currently it does not seem like Anduril has any desire to pivot outside of the defense sector. The first criteria needed in order for Anduril to begin building something as laid out by Palmer Luckey is that “it must be something that the Pentagon cares about.”¹⁵ Unlike Palantir, who successfully moved out of only the defense world and began offering its product to Silicon Valley giants, Anduril seems to have little appetite for the private sector. Anduril seems intent on sticking to its mission and staying in the defense sector. This might be due to the fact that Anduril is primarily a hardware company combined with software, making the pivot more difficult than a pure software company. It is also noteworthy that Palantir was always intended to be used for more than just defense. From the beginning, Palantir wanted to use the same technology that could detect terrorists in order to detect even white-collar criminals committing fraud.¹⁶ At least for the present moment, Anduril seems intent on not entering the private sector. The question then needs to be asked, is their TAM around $16 billion in revenue every year? At the rate they are growing now, it only leaves a few more years of growth before their market is fully saturated.

Due to this, Anduril is trying to break into legacy defense spend. It is important to note that one of the main reasons that these five companies dominate the industry is because of the scale and massiveness of things they produce. The most recent aircraft carriers cost $13 billion each. The entire program cost $120 billion. Anduril’s drones which they sell for tens of thousands of dollars are peanuts in comparison. The marine corps recent purchase of 600 of Anduril’s strike drones cost only $24 million.¹⁷ To make it clearer, the US army would have to purchase hundreds of thousands of Anduril’s strike drones in order to reach the cost of one aircraft carrier.

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It is perhaps for this reason that Anduril has decided to pivot to more grand and expensive products. The current Arsenal-1 factory, a five million square foot facility they are building in Colombus is specifically for this purpose. As Anduril grows, they are able to expand not only their physical workspace, but also increase their budget, expand their teams, and build on previous R&D, all expanding the horizons of what is possible to build. And growth also demands bigger products, as Brian Schimpf put it Anduril today only invests in “What is believably going to be a big enough business to justify us being in.”

Anduril achieved a major success in March of 2026 when the pentagon awarded them a ten-year contract worth up to $20 billion.¹⁸ This contract, consolidating and streamlining Anduril products officially moved them out of the “side contractor” role and directly into the “legitimate partner” role. This contract was also a significant factor in their valuation jump they experienced in 2026. The breakthrough is critical to Anduril; the first step of a long journey trying to break into the “big five” and expanding their potential market.

In addition, Anduril isn’t content staying within the US. They are aggressively partnering with other militaries, notably making a deal worth over a billion dollars with Australia’s navy for autonomous submarines¹⁹. Last year, they also partnered with Taiwan’s top defense research institute, developing Lattice in real time to help make crucial military decisions²⁰.

Today, as Anduril continues to grow, Anduril is expanding into autonomous fighter jets and submarines, products that traditionally cost hundreds of millions of dollars. These massive deals, provide massive much needed revenue. And the deals are hugely beneficial for the government as well, Anduril is targeting a $25-30 million price tag for its autonomous fighter jet, something that is a fraction of the cost of a traditional fighter jet, all while not putting human lives directly at risk.

Anduril’s future isn’t just in producing state of the art drones. If it can successfully break into areas that have significantly higher spend, they can go from being a fringe R&D company that provides futuristic potential, to one of the cores of the US army.

But competition isn’t sitting by idly watching Anduril eat into their market share. Lockheed Martin is currently building an unmanned autonomous UAV that bridges software and hardware in a way similar to what Anduril is doing.²¹

RTX, one of the largest producers specializing in aerospace and defense, is building their own software that uses a “modular, scalable and mission-ready AI-powered solution that integrates seamlessly across platforms and domains.” This autonomous software was integrated into the US Air Force, a huge tactical victory for RTX.²²

No one else is sitting idly by, Boeing, General Dynamics and Northrop Grumman are all building their own state of the art technology that they are using to try and stay ahead of Anduril. Anduril’s goal is to beat these companies with both superior products and pricing. But it’s not that simple. Not only are these companies continuing to innovate, but many have critical structural advantages to Anduril that go beyond simply the products themselves. Connections with senators and lawmakers, cleared support for their facilities and government contracts that have already been negotiated, all things that will be tough for Anduril to crack as they play the catch-up game in multiple different sectors.

And to do this, Anduril uses a very different pricing system than their competitors. Instead of having a conservative strategy where government covers all R&D costs and signs additional deals for the product themselves, Anduril takes the risk on themselves. If the product isn’t viable, they get nothing. This strategy is hugely beneficial to the government as they don’t have to pay millions of dollars on hypothetical projects that might not work out. This is also significantly riskier than what traditional giants are willing to agree to. But it is one that is fundamental to the way Anduril operates today.

“We like models where if it doesn’t work, we don’t get paid. It’s a controversial position but we really prefer models that hold us accountable to delivery. It makes us a better company.”
Brian Schimpf - Anduril CEO

This high-risk R&D playbook is extremely similar to SpaceX. In the same way Musk forced NASA to pivot to his more efficient and cost saving rocket launches, Anduril’s goal is to offer a product that is so good that the government has to move over to their products despite the switching costs associated. By building products in the private market and using venture capital to fund their innovation, Anduril hopes to outpace its opponents who often need to wait for government clearance and contracts which can take years.

Leadership:

When looking at any company, especially a young company in the private sector, it is critical to understand leadership.

Anduril leadership was built on five main pillars. Palmer Luckey is the founder, visionary and face of Anduril. Press conferences and anything in the spotlight will be handled by Luckey. Next, you have Brian Schimpf, the CEO and often considered the operation brain behind the company. Finally, you have Trae Stephens, Co-Founder and Executive Chairman running the financial side of Anduril. A partner at Peter Thiel’s venture capital fund, Stephens was the original mind behind pairing Luckey with a group of former Palantir employees in order to create Anduril.

Anduril’s original team, from left to right: Brian Schimpf, Palmer Luckey, Trae Stephens, Matt Grimm, Joe Chen.

All three of them have the majority of their worth tied up in performance milestones and stock equity. Luckey, already worth hundreds of millions from his Oculus exit pays himself only $100,000 a year. Schimpf is the only one with a true salary, worth upwards of $1 million per year. But even this salary is dwarfed by his performance compensation and by the stock that he holds, which is reportedly above 30 million shares and worth over a billion dollars. ²³ Stephens, an early investor in Anduril owns personally 3-4% of the company, making that stake worth around $2 billion as of Anduril’s recent valuation.

This is a major green flag for potential investors; management gets paid for performance rather than a base rate. Therefore, they will always have massive incentivizes to grow the company, as it is tied to their personal wealth and influence. This is often the case in founder led companies such as Meta run by Zuckerberg, Amazon run by Bezos and Tesla ran by Musk.

There is some controversy around the leadership as well. Luckey with his Hawaiian shirts, goatee and mullet, has his share of controversies. Luckey was sued for hundreds of millions for stealing data and pushed out of Facebook most likely due to a personal donation to a PAC. He also is very vocally anti-woke and has strong pro-military and nationalistic sentiment, several topics that are currently hotly debated in the US. For those potentially considering investing in Anduril, it’s important to view the leadership as more of a provocative Musk style than the quiet behind the scenes leadership of Sundar Pichai at Google.

The Ethical Questions:

When investing in Anduril, there is an ethical question that needs to be asked. Anduril is a company that creates autonomous weapons that is made to kill, often without human supervision needed.

Investing in a technology that kills should immediately raise questions. Technology that has the ability to kill people without human supervision raises additional questions. Namely, do we want to invest in a company that is moving us towards a deadlier world where artificial intelligence can kill?

This is an area that is extremely controversial. Palmer Luckey has previously addressed this issue:

“There’s no moral high ground to making a land mine that can’t tell the difference between a school bus full of children and Russian armor… it’s not a question between smart weapons and no weapons. It’s a question between smart weapons and dumb weapons.” Palmer Luckey.²⁴

Luckey makes a nuanced point, as technology progresses, it should be used to make weapons that are not just more deadly but more ethical. A drone that targets indiscriminately is less sophisticated, but also less ethical than a drone that targets only terrorists. Weapon sophistication can hypothetically be used to properly differentiate between civilians and militants, something that is often incredibly hard to do for humans. On the other hand, autonomous weapons can also kill without human supervision. If that sounds like a recipe for disaster, it’s because it is. AI that can kill should be treated with extreme caution and is a topic that led to a major conflict between Anthropic and the white house. ²⁵ Even Palmer Luckey, admitted that AI will inevitably kill innocent people. In a case such as that, who is held accountable?

"There will be people who are killed by AI who should not have been killed. That is a certainty if artificial intelligence becomes a core part of the way that we fight wars. We need to make sure that people remain accountable for that because that's the only thing that'll drive us to better solutions and fewer inadvertent deaths, fewer civilian casualties."

The Profitability Problem:

Few companies have ever grown as quickly as Anduril has. Their consistent doubling of revenue is something that matches and even exceeds companies going through hyper growth stages. And there’s no indication that Anduril is slowing down.

“We have consistently doubled revenue every year. We have massively ramped up number of number of employees and the number of products we have been able to field is pretty unsurpassed. We have been able to show the ability to rapidly get capability out to the field and that there is a demand to it. It’s grown a lot faster than I anticipated,” Brian Schimpf.

As Anduril continues expanding their product line, introducing more expensive products, their revenue could potentially accelerate. If the US government orders a fleet of 25 autonomous fighter jets, it could produce a billion dollars of revenue in a single order.²⁶

However, revenue doesn’t equal profits. Today, due to massive costs in both production and R&D, Anduril is not profitable and projected to report a negative $1 billion operating loss in 2026.²⁷ More than that, Anduril projects that they will not reach EBITDA profitability before at least 2030. If the hype dies down around Anduril, investors will be left with a company that has massive production costs without the revenue to show for it. This is a similar playbook to the one used by Palantir, which only became profitable in 2023, twenty years after it was founded.

If Anduril does follow the Palantir playbook, investors might have to stomach serious volatility and falls. Palantir increased by 350% after their IPO in 2020 before crashing over 85% less than half a year later. The stock traded up because of excitement and enthusiasm over new AI technology, something that is similar to the Anduril story today.

The key to Anduril turning profitable is whether they will ever be able to break into the barrier that separates legacy companies from minor players. This barrier for entry in the defense industry is incredibly hard to enter and there hasn’t been a new prime contractor in decades.

If Anduril is able to break in, they will be the first prime contractor company in decades. If not, they might just become the largest defense-tech blowup ever.

Valuation:

When looking at valuation, Anduril is particularly tricky to value properly. The main problem is that their revenue structure is fundamentally different than those in their own industry. Their unique mix between defense and tech also differentiates them from their competition. Adding to the challenge of valuing Anduril is the fact that because the company is private, they have no price to earnings and because they aren’t profitable EV:EBIDTA is irrelevant.

Instead, I have chosen to focus on Expected Value:Sales. Typical defense companies trade at a 1.5 to 2.5 EV:Sales. Anduril is currently trading at an EV:Sales of 27.7x or 14.2x if we look at their forward 2026 revenue.

If instead we look at Anduril as a software company, traditionally, successful SaaS companies trade at between 4-8x, Adobe for example is trading at 4x, ServiceNow at around 7x. All these seem make Anduril look overvalued, even if we look at them as a software company.

However, if we instead compare Anduril instead to growth companies, their valuation starts to seem more reasonable. Palantir, has an EV:Forward sales of 38x and Nvidia at 24x.

But there is an important caveat to mention here. Palantir’s revenue is purely from software, allowing them to have gross margins of around 80%. Anduril will never be able to get close to this amount as their margins are capped by fixed hardware costs.

Currently, the market values Anduril as a software growth stock rather than a hardware making defense company.

Essentially those who invest in Anduril are investing in what is currently valued as a high growth technology stock. Additionally, while the companies previously mentioned has managed to turn profitable, Anduril’s profitability is years away, something even the company has admitted.²⁸

That being said, Anduril’s revenue and sales are increasing at a rate seen by few stocks ever. As mentioned previously, Anduril has managed to nearly double revenue every year since they were founded. If this explosive growth continues for a few years, the EV:Sales number might look a lot more reasonable.

Investors in Anduril today are paying for an unprofitable company at a premium valuation growing extremely quickly. While that doesn’t mean that it’s a bad investment, it’s important to have this in mind instead of only looking at the hype as the valuation climbs.

IPO Timeline:

Investing in the private market has inherent risk involved as if the company never goes public your money can be illiquid. Therefore, one of the most important questions when investing in private companies is will they go public and if so when.

The first part of the question isn’t exactly obvious. Doesn’t every company go public? Not exactly. Often, companies who don’t need additional cash flow and want to keep shares with leadership and early investors will choose to stay private. This insures additional financial independence, avoiding regulations and having operational flexibility. However, for some companies, access to additional capital invested, liquidity for early shareholders and a potential increase in brand visibility is more important and will therefore choose to go public.

Anduril has made it clear that they are planning to go public and that it is a matter of when rather than if.

“We are not constrained into making sub optimal decisions, we can choose the timing that makes sense.” - Brian Schimpf

Palmer Luckey has also said that because Anduril gets significant money from the taxpayers, he believes that the public should be able to invest.

In terms of a timeline, in 2024, Luckey mentioned that “An IPO is definitely on the roadmap.”²⁹ Last year, he went further stating that an IPO can be expected int “low single-digit years”.³⁰ For those interested in investing once they go public, the most likely consensus is probably around late 2026 or early 2027.³¹ It is noteworthy that IPOs from private companies can often drag out and happen later than expected and it wouldn’t be surprising to see Anduril’s IPO happen in 2027 or even later.

Final Thoughts:

The bear case is simple with Anduril. Paying a value premium for a company that doesn’t expect to be profitable in the next few years is highly risky. Flawless execution is required from a management team that has already had a few hiccups. R&D costs will continue to increase as production scales, and hardware costs are expensive. These are tangible costs that even with smart accounting tricks can’t be ignored.

But the bull case is equally compelling. A revenue pace that is increasing at a rate out of this world and a leadership team who has proven to be extremely capable and innovative. With their ten-year $20 billion government contract, Anduril proved that they are no longer a small-time contractor. In addition, together with the hardware they offer, their software, Lattice turns them into a “one stop company” who can do it all, making their revenue significantly stickier and their products superior.

The legacy big five have a combined market share of around $700 billion, one that has more than doubled in the last decade. If Anduril is able to succeed in offering a better product at a cheaper price, today’s $60 billion will seem like not just a good deal but a bargain. Of course, the risk exists and investing in a company who won’t turn profitable for the next few years is inherently risky. For those willing to stomach the ride and hold through volatility, this could be a good company to invest in. Either way, the ride will be fascinating to watch.

1. https://about.fb.com/news/2014/03/facebook-to-acquire-oculus/

2. Unicorn status = Time it takes to reach $1 billion.

3. https://www.bloomberg.com/news/articles/2026-05-13/anduril-valued-at-61-billion-in-round-led-by-thrive-andreessen

4. https://www.thedailybeast.com/palmer-luckey-the-facebook-near-billionaire-secretly-funding-trumps-meme-machine/

5. https://www.engadget.com/2014-05-21-oculus-vr-lawsuit.html

6. https://www.cnbc.com/2018/11/12/palmer-luckeys-facebook-firing-and-techs-anti-conservative-debate.html

7. https://www.engadget.com/2018-11-11-facebook-pressured-palmer-luckey-to-support-politician.html

8. https://www.anduril.com/

9. https://www.wired.com/story/palmer-luckey-anduril-border-wall/

10. https://www.minister.defence.gov.au/media-releases/2025-09-10/equipping-royal-australian-navy-next-generation-autonomous-undersea-vehicles

11. https://www.anduril.com/fury

12. https://usafacts.org/answers/how-much-does-the-us-spend-on-defense/country/united-states

13. https://euperspectives.eu/2026/03/nato-defence-spending-2025-rutte/

14. Lockheed Martin, RTX (Raytheon), Boeing, Northrop Grumman, and General Dynamics

15. https://podcastnotes.org/investors-field-guide/palmer-luckey-inventing-the-future-of-defense-invest-like-the-best-with-patrick-oshaughnessy-ep-350/

16. https://matrixbcg.com/blogs/brief-history/palantir#

17. https://www.tectonicdefense.com/marine-corps-places-24m-order-for-600-anduril-strike-drones/

18. https://www.army.mil/article/291074/u_s_army_awards_enterprise_contract_for_it_commercial_solutions

19. https://www.anduril.com/news/ghost-shark-factory-opens-in-sydney-first-vehicle-off-the-line-ahead-of-schedule-ready-for

20. https://militarywatchmagazine.com/article/us-military-ai-giant-anduril-landmark-defence-republic-china

21. https://www.lockheedmartin.com/en-us/capabilities/autonomous-unmanned-systems.html

22. https://breakingdefense.com/2025/09/rtx-shield-ai-picked-to-give-collaborative-combat-aircraft-autonomous-capabilities/

23. https://qz.com/anduril-raises-5-billion-valuation-61-billion-051326

24. https://www.cbsnews.com/news/anduril-ceo-unveils-the-fury-unmanned-fighter-jet-60-minutes/

25. https://www.americanprogress.org/article/the-trump-administration-is-trying-to-make-an-example-of-the-ai-giant-anthropic/

26. A typical US order of fighter jets is between 12-40 fighter jets.

27. https://sacra.com/c/anduril/#:~:text=Anduril

28. https://finance.yahoo.com/news/anduril-expects-double-sales-lose-211557605.html

29. https://www.ipo.club/deals/anduril#

30. https://www.businessinsider.com/palmer-luckey-america-worlds-gun-store-defense-tech-2025-12

31. https://forgeglobal.com/anduril_ipo/#