Smaller defense AI firms are reporting increased engagement from military stakeholders following the Pentagon’s decision to exclude Anthropic.
Startups such as Smack Technologies and EdgeRunner AI said they have seen a rise in inquiries from US military units and investors in recent weeks, according to Reuters.
Company leaders reported fielding calls from generals, combatant commanders, and investors, pointing to growing demand for deployable AI systems.
In some cases, contracts that had been delayed for more than a year were approved within weeks, suggesting increased urgency to bring AI capabilities into operational use.
“We’ve seen a massive increase in demand from customers and the government to get AI solutions fielded since Anthropic was declared a supply-chain risk,” said Tyler Sweatt, chief executive of Second Front Systems.
Reshaping Defense AI Market
The rise in demand comes as the Department of Defense indicates it will further scale up AI deployment through industry collaborations.
“The Pentagon will continue to rapidly deploy frontier AI capabilities to the warfighter through strong industry partnerships across all classification levels,” a Pentagon official stated.
Last month, it designated Anthropic as a “supply-chain risk,” limiting its role in defense contracts amid disputes over AI use policies.
According to Reuters, these developments could reshape the defense AI market, with smaller firms positioned for near-term gains, while larger players such as Palantir, Google, xAI, and OpenAI may compete for major programs over time.
Meanwhile, Anthropic could still re-enter the defense market depending on the outcome of ongoing legal challenges.
