Defense tech could be entering its awkward teenage years. Is the boom a bubble?

Drones, missiles, and warships were, for a long time, deemed uninvestable in Silicon Valley—or, at minimum, contentious. Consider 2018: Googlers were storming out over their company’s involvement in the AI military initiative Project Maven, and Anduril was the anomaly, a multi-million defense-focused startup soon to be headlined as “the most controversial startup” in tech. VCs touched defense rarely, if at all. Today, they can’t get enough. Anduril, now valued at $61 billion, is joined by a growing class of “neo-primes,” from autonomous shipbuilder Saronic, last valued at $9.25 billion, to drone maker Shield AI, at $12.7 billion. Defense has exploded into a consensus growth area among VCs, seen as ripe for AI-fueled innovation. The numbers bear it out: in the first quarter of 2026, VCs deployed a record $19.8 billion into defense tech across 262 deals, according to PitchBook. (For comparison: That number in Q1 2024 was $5.7 billion, and in Q1 2025 about $17 billion.) The vibe shift is sending valuations into the stratosphere. Early-stage defense startups are raising millions and fetching multiples from 17 times to 50 times revenue (sometimes even higher). With the market running so hot, the inevitable question that emerges: Are we in a bubble? At Fortune’s Brainstorm Tech conference in June, Anduril CEO Brian Schimpf answered with a nuanced but decisive “Yes.” “When there are successful companies, you have lots of other companies and investors chasing that, and [there can be] very risky behavior,” Schimpf said onstage. “We’ve been very careful at every stage to manage this, but it’s easy to chase those valuations if you’re not being careful. So, I do think there’s a bit of a bubble. Capital’s cheap, and it’s great if you can get capital as an advantage—go for it. But do understand the consequences for your company when you do: You put expectations through the roof of what you can deliver on.” Given how far ahead valuations have gotten from th