AI Summary
5 min readThe NATO summit that kicked off in Turkey this week produced a headline number: allies agreed to at least $50 billion in defense industry deals and $40 billion in counter-drone capabilities. But the bigger story is what those numbers signal. The United States is pulling military assets out of Europe and shifting focus to the Middle East and Indo-Pacific, forcing Europe to shoulder more of its own defense. Meanwhile, Trump’s 2027 budget proposes $1.5 trillion for defense — the largest request in history. And Silicon Valley is piling in: defense tech companies have raised more than $19 billion so far this year, already blowing past last year’s record. An enormous amount of capital is flowing into defense. The question is what exactly we are gearing up for.
Three forces driving the arms buildup
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What you'll learn
- 1 (01:28) **Episode Introduction & Market Vitals** - Ed Elson recaps the day's market moves: chip stocks tumbled, oil rose after Strait of Hormuz attacks, Microsoft stock rose, and SpaceX declined on its first day in the NASDAQ 100.
- 2 (02:09) **The New Global Arms Race** - The NATO summit signals a massive increase in global defense spending, with $50 billion in defense deals and a record $1.5 trillion US defense budget request.
- 3 (03:06) **Interview: Steve Feldstein on the New Shape of Modern Warfare** - The senior fellow joins to discuss the drivers behind the surge in defense spending and the role of tech companies.
- 4 (03:38) **Three Factors Driving the Arms Race** - Feldstein identifies the key causes: more conflict worldwide, Russia's wartime footing, and the use of new technologies like AI targeting systems.
- 5 (05:15) **Silicon Valley's Role on the Battlefield** - Tech companies are not replacing traditional arms manufacturers but complementing them, as seen with Palantir's Maven targeting system paired with AI.
- 6 (08:14) **Assessing Global Instability** - The world is more unstable than a year ago due to the Iran war, the ongoing Ukraine conflict, and the limitations of American power under a volatile president.
- 7 (10:19) **Will Defense Spending Keep Rising?** - A gap exists between allocated money and manufacturing capacity. Key growth areas include counter-drone systems and building up munitions production capacity.
+ Full timestamped outline available in the app
Show Notes
Ed Elson is joined by Steve Feldstein to break down why countries are pouring so much money into defense and what that says about the future stability of the world. Then, Zed Francis joins the show to break down why chip stocks are selling off despite strong earnings from Samsung. Finally, Ed is joined by Ara Kharazian to dig into his paper which showed that the biggest AI spenders are actually hiring more than non-adopters.
Steve Feldstein is a senior fellow at the Carnegie Endowment for International Peace. Zed Francis is the CIO & Co-Founder at Convexitas. Ara Kharazian is the Lead Economist at Ramp.
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