The Pentagon's next major missile defense program is attracting a new group of contractors beyond the traditional defense industry. Alphabet is reportedly in early talks to help secure data for Golden Dome, a $185B missile shield, joining a growing list of technology companies competing for a share of Washington's expanding defense spending.
Big Tech enters missile defense
Google is discussing a role in data storage, networking, and cybersecurity for Golden Dome, according to people familiar with the talks. The company could join a consortium responsible for securing information used by the program's military software, although the Pentagon has yet to finalize its participants.
The missile shield's command-and-control systems, which connect weapons, radars, and other defense equipment, are being developed by a separate group that includes Anduril, Palantir Technologies, and SpaceX.
Unlike traditional defense programs dominated by a single contractor, Golden Dome brings together established manufacturers and technology startups. Its initial cost is estimated at $185B, while long-term maintenance and replenishment could push spending toward $1.2T over two decades.
The Pentagon is also shifting away from cost-plus contracts, which reimburse expenses and provide a negotiated profit. Newer arrangements increasingly reward companies that deliver projects on time and within budget, creating opportunities for technology-focused defense firms.
Traditional contractors still dominate
Despite growing competition, established defense companies continue to control most Pentagon spending.
The U.S. defense budget exceeded $1T in fiscal 2026, with a proposed increase to $1.5T for 2027 under discussion. Boeing, Lockheed Martin, RTX, and Northrop Grumman collectively account for 92% of Pentagon contracts.
Pie chart. Share (%). Four Major Primes: Share (%) 92%. Other Contractors: Share (%) 8%.
Their positions remain particularly strong in hardware-intensive programs. Lockheed is the sole prime contractor for the Missile Defense Agency's Next Generation Interceptor program, while RTX recently converted $70B in missile agreements into binding early-start contracts.
Government spending also remains central to their businesses. Lockheed generated 69% of its third-quarter revenue directly from the U.S. government, while federal contracts represented approximately 37.9% of Boeing's consolidated revenue.
Software companies gain ground
Technology-focused defense firms, often called neoprimes, are gaining traction through large government software agreements.
Pentagon Enterprise Agreement Ceiling
Ceiling of 10-year Pentagon enterprise agreements, $B
Bar chart. Contract Ceiling ($B). Anduril: Contract Ceiling ($B) $20. Palantir: Contract Ceiling ($B) $10.
Anduril secured a 10-year enterprise agreement worth up to $20B, consolidating 120 separate contracts. Palantir received a similar agreement with a $10B ceiling, combining 75 existing contracts.
These arrangements make it easier for government agencies to purchase additional services without negotiating entirely new contracts.
Palantir already generated approximately $1.885B, or 41.5% of its annual revenue, from the U.S. government, with federal sales growing 55%. Google also expanded its defense presence in 2025 through a $200M Pentagon AI and cloud computing contract.
Other enterprise software companies are following. Salesforce agreed to acquire military logistics startup Rune Technologies, which holds a $99M Army software agreement.
Salesforce's defense business grew 80% year over year, supported by a separate 10-year Army contract worth up to $5.6B.
What it means for investors
The growing role of technology companies creates new opportunities in defense spending, but winning contracts doesn't necessarily guarantee long-term revenue.
Venture investors committed approximately $49B to defense technology in 2025, yet only 14% of reviewed Defense Innovation Unit prototypes awarded between 2016 and 2023 progressed into production.
For investors, companies with established multiyear agreements may offer more predictable exposure than startups still competing for their first major contracts.
Traditional contractors also remain relevant. Lockheed and RTX recently reported record backlogs and raised their 2026 forecasts, while Booz Allen Hamilton reported a 3.9% revenue decline amid procurement delays.
Valuations have adjusted accordingly. Major defense contractors now trade around 19x expected earnings, down from 26x in March, bringing them closer to the broader market.
Meanwhile, newer entrants carry substantial premiums, with Anduril valued at roughly 30x revenue and Palantir trading even higher.
The Pentagon's spending shift could benefit both groups, but investors will need to distinguish companies securing recurring government revenue from those whose valuations already assume years of rapid growth.
