Dan Ives of Wedbush Securities has been one of the loudest voices calling defense AI a generational spending cycle, and his latest comments make the investment thesis more concrete. Asked about the fiscal 2026 OMB budget proposal and its increased AI spending allocations, Ives named names.
It’s going to be massive. I mean, look, it speaks to one of the bullet thesises with Palantir. And I think that’s really the first one. If you’re going to see when it comes to so many software names and tech names that are really, I think, going to be more and more integrated on the defense side. And I think it comes down to AI technology. Palantir is the first one we saw, but you’re going to see Oracle, you’re going to see Microsoft. You’re going to see many of these other players getting a piece.
Dan Ives, Wedbush Securities
Ives framed the current geopolitical environment as driving a “whole new warfare” paradigm that makes AI technology essential at the military level, not just in enterprise. I’ve been following his AI spending thesis pretty much every week for the past two years, and this is the clearest he’s been about which companies sit at the top of the defense integration stack.
Palantir: The First Mover
Palantir Technologies (NASDAQ:PLTR | PLTR Price Prediction) built its foundation on government intelligence work. Its Gotham platform is already embedded inside defense and intelligence workflows, which is why Ives calls it the first mover. The numbers back that up: U.S. Government revenue hit $570M in Q4 2025, up 66% year over year, while total Q4 revenue reached $1.407B, up 70% YoY. CEO Alex Karp has been direct about the positioning: “We are an n of 1…Palantir is alone in choosing to exclusively focus on scaling the operational leverage made possible by the rapid advancements of AI models.”
The company is guiding for FY2026 revenue of $7.182B to $7.198B, roughly 61% growth year over year. At a trailing P/E of 239x and forward P/E of 115x, the valuation prices in a lot of that optimism. The stock is down about 16% year to date even as the one-year return sits at nearly 70%. Reddit sentiment has turned bearish to very bearish in recent weeks, which tells me retail investors are getting impatient with the valuation even as the fundamental story keeps strengthening.
Oracle: Infrastructure at Scale
Oracle (NYSE:ORCL) is building the plumbing. Cloud infrastructure revenue grew 84% year over year to $4.888B in its most recent quarter, and all top five AI models now run in Oracle Cloud. The company’s remaining performance obligations stand at $553B, up 325% year over year signals demand far outpacing what’s on the income statement. Oracle is down about 25% year to date, well below its 52-week high of $344.21, creating an interesting entry point for investors who believe the infrastructure buildout thesis holds. The forward P/E of 18x is a fraction of Palantir’s multiple for a company growing cloud revenue at a comparable pace.
Microsoft: The Pentagon’s Cloud Partner
Microsoft (NASDAQ:MSFT) brings the enterprise relationships and Pentagon contract history. Azure grew 39% year over year last quarter, and the company holds a roughly 27% stake in OpenAI with $250B in Azure services contracted. CEO Satya Nadella captured the scale of what’s being built: “We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises.” At a forward P/E of 20x and with 58 analyst Buy or Strong Buy ratings against zero Sells, Microsoft carries the broadest institutional support of the three.
Ives’ core argument: defense AI spending is a structural budget line, not a pilot program. Palantir owns the software layer, Oracle is building the cloud infrastructure underneath it, and Microsoft provides the enterprise backbone and AI models on top. If you think the OMB’s AI budget priorities hold through the next spending cycle, that stack is worth understanding before the contracts get announced.
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