Inside the Iran War and the Pentagon's Feud with Anthropic with Under Secretary of War Emil Michael
Speakers
Chamath Palihapitiya — Host / VC
— Social Capital CEO
David Friedberg — Host / Entrepreneur
— Production Board CEO
Jason Calacanis — Host / Angel Investor
— angel investor, All-In host
Summary
- Geopolitical Context (2026): The US and Israel are in "Day 6" of a conflict with Iran ("Operation Epic Fury"). Iran's Supreme Leader has been killed, and the US is enforcing a blockade to starve China of oil leverage ahead of trade negotiations.
- AI Supply Chain Shock: The Pentagon has formally designated Anthropic a "supply chain risk" and cancelled a $200M contract due to the company's refusal to allow "all lawful military use" (specifically regarding kinetic strikes and autonomous systems).
- Defense Shift: The DoD is aggressively pivoting from "cost-plus" prime contracts to "commercial-style" fixed-price contracts, favoring new entrants in drone swarms, autonomous systems, and low-cost munitions.
- Energy Volatility: The Strait of Hormuz is effectively closed, risking 3.3M barrels/day. Insurance premiums for maritime shipping have spiked 500%, forcing the US government to backstop insurance to maintain leverage over China.
Trade Ideas
The DoD is running a "drone dominance program" focused on "Lucas low-cost unmanned combat attack systems" (one-way attack drones) and "collaborative aircraft" that fly alongside jets. The shift is away from $20B aircraft carriers toward "mass tradable, low-cost" autonomous systems. AeroVironment (AVAV) and Kratos (KTOS) are the pure-play leaders in loitering munitions and unmanned wingmen, fitting the exact description of the hardware the Under Secretary is demanding. Long US drone manufacturers as the DoD rushes to "plus up" munitions and autonomous arsenals. Supply chain bottlenecks for batteries and chips (which are currently China-dependent).
The Strait of Hormuz is threatened, risking 3.3 million barrels of daily production. Maritime insurance premiums have spiked from 0.25% to 1.25% (5x increase), and supertanker traffic dropped 94% in 48 hours. While the US government is backstopping insurance to keep some flow moving, the physical constraint on supply (mines, attacks) and the "war risk" premium will drive spot prices significantly higher. The strategic goal is to starve China of oil, implying the blockade will be sustained until a "grand bargain" is reached in April. Long Oil (USO) and Energy Producers (XLE) to capture the scarcity premium and supply shock. A sudden peace deal or "grand bargain" with China/Iran that floods the market with supply.
Emil Michael reveals that Palantir is the "prime contractor" for the Pentagon's AI infrastructure and that Anthropic was merely a "sub" whose model sat inside Palantir's GovCloud instance. With Anthropic blacklisted for refusing "lawful use" clauses, the DoD must rely even more heavily on the prime (Palantir) to swap in compliant models (like Google's Gemini or Meta's Llama). Palantir's role as the "control plane" is validated as mission-critical; they are the gatekeeper of the AI supply chain for the military. Long PLTR as the indispensable operating system of the war effort, benefiting from the churn of underlying models. If the DoD decides to build its own internal control plane to reduce vendor lock-in with Palantir.
Emil Michael confirms that Google (Gemini) and OpenAI (Microsoft) have agreed to "all lawful use" terms, unlike Anthropic. Chamath explicitly states, "Google is the bet... the market value creator." Anthropic's "moral" refusal to support kinetic military operations creates a massive vacuum in the defense sector. Google and OpenAI are explicitly named as the compliant alternatives that will absorb this government revenue. Furthermore, Chamath notes Google will likely launch a "virtual coworker" feature within 90 days to crush Anthropic's enterprise moat. Long GOOGL and MSFT as they capture the defense market share abandoned by Anthropic and integrate agentic AI into enterprise suites. Regulatory backlash from progressive constituents regarding military contracts.
The DoD is actively using the "Office of Strategic Capital" ($200B lending authority) to domesticate critical minerals and batteries, which are currently "totally outsourced to China." As the conflict with China (via Iran proxy) escalates, the US government will aggressively fund domestic rare earth mining and processing to secure the defense industrial base. MP Materials is the primary US-listed beneficiary of this reshoring effort. Long MP as a recipient of government capex and strategic protection. Environmental regulation slowing down domestic mining expansion.
Up Next
This All-In Podcast video, published March 06, 2026, features Emil Michael, David Friedberg, Chamath Palihapitiya discussing AVAV, KTOS, USO, XLE, PLTR, GOOGL, MSFT, MP. 5 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Emil Michael, David Friedberg, Chamath Palihapitiya · Tickers: AVAV, KTOS, USO, XLE, PLTR, GOOGL, MSFT, MP