Weapons of Mass Disruption

Public markets were relatively flat over the past week, with the S&P500/Nasdaq100 +0%/+1%. YTD the S&P500/Nasdaq100 are now +8%/+11%. Our NPM Private Market Tracker*, which shows the estimated average price performance of the 50 largest names in our internal Tape D® data, is now +25% YTD, significantly outperforming public markets. (Source: NPM; Bloomberg)

In a trend likely accelerated by the conflict in Ukraine, AI is transforming defense technology rapidly, reshaping how militaries gather intelligence, make decisions, and project force. The integration of AI into defense spans multiple domains — from autonomous systems and drones to electronic warfare, cyber defense, and battlefield logistics. The urgency to deploy AI in the US is also being driven by competition with China and Russia, both of whom are investing heavily in military AI capabilities. The U.S. DoD has acknowledged that AI superiority will be a defining factor in future conflicts, prompting initiatives like Project Maven, which uses AI technology to analyze images and identify objects from drone footage. (Source: Reuters; Bloomberg)

While legacy defense contractors are key participants in AI defense, significant innovation is also coming from Silicon Valley. According to McKinsey, VC investment in defense technology was +33% in 2024 to $31bn, and momentum has continued into 2025. For instance, Anduril Industries, one of the most active names in the private market, raised $2.5bn in 6/25 at a $31bn valuation. Shield AI, focused on autonomous aerial drones, raised $240mm in 3/25 at a $5.3bn valuation. Helsing, a German defense AI company, raised €600mm in 6/25 at a $12bn valuation. Other notable startups include Rebellion Defense ($1.2bn EV), Saronic Technologies ($4bn EV) and Skydio ($2.5bn EV). In addition, key legacy players in the space – Lockheed Martin, Northrop Grumman, Raytheon, and BAE Systems – are all embedding AI across their platforms. Finally, hyperscalers such as Google and Meta have removed language from corporate policies banning the use of AI in weapons, a small but notable change (Source: NY Times; Bloomberg; Pitchbook).

Driven by geopolitical and technological tailwinds, the AI defense ecosystem has performed well. The S&P Aerospace and Defense Index is +32% YTD. In private markets, for 1H25 the Defense subsector was the second-best performer (after Robotics) at +76%. At NPM, our most active defense names have been the previously mentioned Anduril Industries (+116% YTD), Shield AI (+62%) and Saronic Technologies (+220%). (Source: NPM; Bloomberg)

BIGGEST MOVERS AND TOPICAL NAMES

Based on our proprietary Tape D® data, the best performers of the large cap names in the private market thus far in 2025 have been x.AI (+161% estimated share price performance), fintech Bilt Technologies (+157%) and OpenAI (+127%). (Source: NPM)​​​​

RECENT EVENTS

• Meta picked PIMCO and Blue Owl to lead a $29bn financing for its data center project in LA. (8/7; Bloomberg)
• President Trump indicated he plans to levy a 100% tariff on chip imports. (8/6; Bloomberg)
• The Bank of England cut interest rates 25bp to 4% (8/7; Bloomberg).

NOTABLE CAPITAL RAISES

• OpenAI is reportedly planning a secondary sale at a $500bn valuation (8/6; Bloomberg)
• OpenAI indicated it is nearing 700mm weekly users. (8/4; TechCrunch)

NOTABLE EXITS

• Crypto exchange Bullish filed for a $629mm IPO that would value the company at $4.2bn (8/4; Bloomberg)