OpenAI bags $200 million Pentagon contract to build AI tools for US ...
OpenAI has secured a $200 million contract with the U.S. Department of Defense to develop advanced AI tools for military use, marking its entry into defense. ChatGPT-maker OpenAI has landed a $200 million contract from the United States Department of Defense to develop cutting-edge artificial intelligence tools for military applications, the Pentagon confirmed on Monday.
Transforming Military AI
It is the company’s most high-profile defense contract to date, placing OpenAI, originally a consumer-facing tech firm, at the heart of America’s military–AI transformation. Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains, the Pentagon stated. The work will be carried out primarily in and around Washington, with an estimated completion date of July 2026.
Strategic Rivalries and Innovation
The deal underscores Washington’s push to harness frontier AI systems for battlefield readiness, faster intelligence synthesis, and advanced decision-making, as strategic rivalries with China and Russia intensify. It also marks OpenAI’s formal entry into the defense establishment, a major evolution for a company better known for revolutionizing education and corporate workflows with tools like ChatGPT and Codex.
Market Expansion and Revenue Growth
As of March 2025, OpenAI had 500 million weekly active users. The company said this month that its annualized revenue run rate had surged to $10 billion, on track to meet its 2025 targets amid soaring global AI adoption. The contract follows guidance issued by the White House’s Office of Management and Budget (OMB) in April, encouraging federal agencies to foster a competitive American AI sector. National security and defense systems were explicitly exempted from the tighter AI oversight — allowing agencies like the Pentagon to move quickly.
Strategic Partnerships and Investor Confidence
That exemption is now being leveraged to formalize OpenAI’s military partnership. Reuters has reported that OpenAI is in talks to raise as much as $40 billion in a new funding round led by Japan’s SoftBank, at a $300 billion valuation — underlining investor confidence in its long-term strategic relevance. The US military has long experimented with AI through its research arm, DARPA. But this new agreement represents a turning point — where private AI leaders are brought directly into core national security missions.
Enhancing Military Capabilities
While technical specifics remain classified, the AI tools are expected to support capabilities such as autonomous decision-making, threat detection, secure communications, and multilingual data analysis. The move is likely to be watched closely in Beijing and Moscow, both of whom have ramped up investments in military-grade AI. The Pentagon’s new AI contract is not just about innovation, it’s about preserving a strategic edge in what many now call the AI arms race.
(With inputs from the agencies)
