Palmer Luckey's defense start-up Anduril is worth $90 billion, up 50% from its recent $60 billion valuation. That's more than Northrop Grumman, roughly as much as General Dynamics, and about twice as much as L3Harris Technologies.
The valuation, based on secondary sales (Anduril isn't raising new money), is the latest example of disruption in the defense business.
Anduril aims to upend traditional contractors by creating software-centric solutions with company-funded R&D offered at commercial prices. It also wants to build weapons that can be mass-produced more easily. Today, Anduril is building everything from quadcopter drones to missiles to autonomous jets designed to work with manned fighters.
The company is serious competition for the legacy contractors. Still, those prime defense contractors might find some encouragement after seeing the valuation. It offers them some hope that investors still care about the industry.
Defense stocks have been terrible since the Iran war began. Coming into Thursday trading, Lockheed Martin, L3Harris, Northrop, and General Dynamics shares were down an average of 23% since late February. Shares of drone technology companies Kratos Defense & Security Solutions and AeroVironment were down more than 50%.
Earnings haven't been the problem. Valuation multiples have come way down. Kratos stock traded at 160 times earnings early in 2026. Now, it trades at 37 times. Northrop traded at 26 times earnings earlier this year. Now, shares are trading at about 16.5 times earnings.
Several factors have led to the defense stock malaise, including rising interest rates, federal deficits, policy uncertainty, potential contract reform, and potential spending gridlock if Democrats retake Congress in the midterms.
All that has overwhelmed tailwinds, including rising geopolitical tensions, higher defense spending in the U.S. and Europe, and the need to retool the U.S. military with more low-cost drones and munitions.
Disruption from so-called neoprimes such as Anduril might also be a factor. The legacy players would probably trade a little disruption for higher valuation multiples.
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