The Pentagon is deepening its partnership with Silicon Valley, betting on Meta-backed Scale AI to shape the future of its artificial intelligence capabilities.
The U.S. Department of Defense awarded Scale AI a $500 million contract to help analyze data and support military decision-making, a significant expansion of the startup’s work with the Pentagon. The deal, managed by the Chief Digital and Artificial Intelligence Office, aims to move the U.S. military from small AI pilots to broad, enterprise-level deployment.
“As the era of small-scale AI pilots gives way to enterprise-wide deployment, the infrastructure decisions the Department makes now – which platforms to trust, which data operations to invest in, which partners to build for the long term – will shape the operational AI capabilities of the U.S. military for the decade ahead,” Kathryn Harris, head of defense at Scale AI, said in a statement.
The new agreement marks a fivefold increase from a $100 million contract the company received in September 2025. Dan Tadross, who leads Scale AI’s public sector business, said the Pentagon had been “pushing the limits” of the initial deal, indicating a strong demand for the company's services. The contract is among the larger AI-specific deals the Pentagon has signed with a startup.
This move is a core component of Defense Secretary Pete Hegseth’s strategy to accelerate AI adoption across the department and remove bureaucratic hurdles. In a January memo, Hegseth outlined plans to rapidly expand the use of AI tools. Following that directive, the Pentagon has also recently finalized agreements with major tech players including Nvidia Corp., Microsoft Corp., Amazon Web Services, and OpenAI to broaden the use of advanced AI across classified networks.
From Data Labeling to Defense Contracting
Founded in 2016 by Alexandr Wang, Scale AI built its business providing data-labeling services for training AI models, with clients like Google, OpenAI, and Microsoft. The company has more aggressively pivoted into defense and government work, a shift accelerated by Meta Platform Inc.'s $14.3 billion investment for a 49% stake last year, which valued Scale AI at $29 billion.
Under the new contract, Scale AI will contribute to projects including the Air Force’s “survivable airborne operations center” by developing “agent-based artificial intelligence” systems. The company is also involved in the Defense Innovation Unit’s Thunderforge initiative, which seeks to integrate AI into military planning alongside companies like Anduril and Microsoft.
“I think this contract is just generally proof that the department is eager to adopt this technology,” Tadross said in an interview.
The contract solidifies Scale AI’s role as a key technology partner for the U.S. government, giving its primary backer, Meta, significant exposure to the federal AI contracting boom. For investors, the deal highlights the growing market for AI applications within the defense sector, favoring companies that can successfully bridge the gap between Silicon Valley innovation and Pentagon requirements.
This article is for informational purposes only and does not constitute investment advice.
