The Israel-Iran war has entered its third week with no signs of slowing down, pushing up global oil prices and accelerating demand for advanced military technologies supplied by major US tech firms.

From artificial intelligence systems to battlefield drones, Silicon Valley companies are increasingly embedded in US defense operations, supplying tools that analysts say are reshaping modern warfare — and boosting corporate profits.

A report by The New York Times said intelligence gathered by the Pentagon is now being analyzed using technology from Anthropic on systems run by data analytics firm Palantir Technologies.

The development highlights how private tech firms have become critical contractors to the US military, providing software and infrastructure once handled internally by government agencies.

Beyond data analysis, companies are also investing heavily in hardware tied directly to combat operations, including drones, laser systems and other emerging weapons technologies.

Industry insiders said the conflict has reinforced the value of these investments.

“People are pointing to this moment as a proof point,” Garrett Smith, a former lieutenant colonel and chief executive of Reveal Technologies, told The New York Times. “It has shown us that in creating and selling these technologies to the US military, we are on the right track. We have made the right investments.”

Artificial intelligence has taken center stage in these efforts.

OpenAI recently entered into a partnership with the US Department of Defense to allow the use of its AI technology in classified networks.

The agreement focuses on analyzing large datasets and supporting administrative operations, with infrastructure potentially supported through cloud computing services provided by Amazon Web Services.

The deal followed a reported breakdown in negotiations between the Pentagon and Anthropic.

The fallout stemmed from Anthropic’s refusal to loosen safeguards preventing its AI systems from being used for fully autonomous lethal weapons and mass surveillance. OpenAI, while maintaining similar safeguards, reportedly offered a more flexible framework that allows human-led oversight rather than strict software-level restrictions.

The Pentagon accepted those terms.

Meanwhile, other major technology firms have secured defense-related contracts as demand for AI-driven systems grows.

According to The New York Times, Google signed an agreement to introduce AI “agents” into Defense Department operations. The US Army also awarded defense tech company Anduril Industries a $20-billion contract for AI-powered military systems.

Defense spending has further fueled the trend.

A domestic policy bill backed by US President Donald Trump allocated roughly $1 trillion for defense, providing a large funding pool that companies can tap as conflicts escalate.

Smaller startups are also gaining traction.

The New York Times reported that drone systems developed by SpektreWorks, a Phoenix-based startup, are being deployed in the battlefield. Its LUCAS drones, designed for one-way missions, mimic Iranian Shahed drones and are used to overwhelm missile defense systems.

Another system, known as Merops, uses drones to counter other drones and was developed as a venture project linked to former Google chief executive Eric Schmidt. The technology has reportedly been used to protect US assets in the conflict.

For publicly listed companies, the financial gains are already visible.

Palantir chief executive Alex Karp said in a CNBC interview that artificial intelligence is giving US forces a strategic edge. The company’s stock has risen more than 12 percent since the conflict began, according to The New York Times.

Despite the surge in contracts and revenues, the industry remains divided.

Some engineers and employees within major tech firms have raised concerns about the use of artificial intelligence and advanced technologies in warfare, particularly in applications that could lead to mass destruction or autonomous killing systems.

Still, with billions of dollars in defense spending flowing into the sector and geopolitical tensions continuing to rise, analysts said the role of Big Tech in modern warfare is only expected to expand.