Look out, Lockheed Martin (LMT 3.05%), and beware, Boeing (BA +5.46%)! Because Anduril Industries is coming for your fighter jet markets, and a defense industry dogfight is brewing.
At the same time that Boeing is crowing over recently winning a contract to develop a new F-47 stealth fighter jet, and while Lockheed Martin is looking to win contracts to upgrade its F-22s and F-35s, over at Anduril, the privately held defense contractor has just unveiled a new unmanned fighter jet powered by artificial intelligence (AI) that could make its rivals' offerings instantly obsolete.
Anduril calls its new plane the Fury Autonomous Air Vehicle (AAV), to distinguish it from merely remotely controlled unmanned aerial vehicles (UAVs). In a CBS 60 Minutes segment last week, Anduril CEO and co-founder Brian Schimpf described Fury as a "CCA," or collaborative combat aircraft, one designed to work in coordination with a manned aircraft.
As Schimpf explained, in combat, Fury would precede and screen piloted aircraft like Boeing's F-47 or Lockheed's F-35 so as to "detect the enemies earlier ... engage and ... protect those manned pilots sitting in the rear."
Image source: Anduril.
Release the Fury...domestically
Analysts estimate that Fury will cost between $25 million and $30 million -- a fraction of the cost of a piloted F-35 fighter jet.
Fury is built with domestically produced "common parts" to keep costs low and simplify manufacturing, according to Schimpf. Fury's landing gear, for example, "can be built in any machine shop in America." And Fury uses the Williams FJ44-4M turbofan engine, "a commercial business jet engine that [is] mass produced and readily available" and costs approximately $2 million.
Fury takes its first test flight later this summer. It is competing with privately held defense contractor General Atomics in an Air Force competition to build the nation's first CCA.
Should you invest in the Anduril IPO?
Co-founder Palmer Luckey says Anduril is "on a path" to IPO after doubling its 2024 revenue to $1 billion in 2024.
How much will investors have to pay to get a piece of the Anduril action? In a report out last week, private equity researcher Forge Global noted Anduril had a $14 billion valuation at the time of its August 2024 primary funding round, and that that value has grown to $29 billion "as of early 2025."
That's an increase of more than 100% in valuation, though Forge notes the value per share increased only 52%, presumably because more shares were issued.
Still, Anduril is doing significantly better than its publicly traded peers, with Forge pointing out that Lockheed stock, for example, gained barely 7% from April 2024 to April 2025, Northrop Grumman gained less than half as much, and General Dynamics stock fell. Anduril stock, argues the analyst, is "rapidly building momentum in a sector historically dominated by legacy players."
As the analyst argues, established defense contractors have a business model of "build to spec, win the bid and iterate slowly," whereas Anduril is disrupting the industry by building products first so it has a ready-made weapons system to present to the military for sale. It's a nice story, but investors should be cautious before investing in it.
Contrary to how Forge (and Anduril) present it, "build first, then sell" isn't an entirely novel concept in defense circles. Nor has it been entirely successful when tried in the past.
12 years ago, for example, Textron (TXT 0.76%) tried to interest the Air Force in a new, budget-priced fighter jet that it had built, the Scorpion jet. A decade later, Textron hasn't found even a single buyer for the aircraft. The fate was similar for Howe & Howe's Ripsaw unmanned tank (coincidentally, now also owned by Textron), and for Juliet Marine Systems' stealth warship, Ghost. All three of these systems were made according to the Anduril model: cutting-edge design, low cost, and a build-first-then-sell approach. All three flopped when the Pentagon failed to bite at the concepts.
I hope Anduril has a happier fate. But given its extremely high valuation of 29 times sales, I'm kind of afraid to bet on it.
