In a move highlighting the Pentagon's accelerating adoption of cutting-edge technology, Code Metal has secured an $80 million contract to modernize WarMatrix, the Department of War’s wargaming simulation environment. The deal marks a significant shift in how the military integrates AI into its strategic planning.
Speed and Modernization
The contract was finalized in less than 12 months, a timeline rarely seen in traditional defense procurement. Boston-based Code Metal, valued at $1.25 billion, specializes in AI-powered software that translates code across programming languages and verifies hardware compatibility. CEO Peter Morales noted that the company’s work is expected to reduce the time required for complex military analyses from months to just days.
Bridging Legacy Systems
Rather than discarding decades of established software, Code Metal’s strategy involves building a software layer that makes legacy infrastructure compatible with modern AI tools. "We’re not replacing decades of validated code," Morales told Fortune. "We’re really making it reachable to the warfighter and to AI." This approach allows the Pentagon to preserve its validated technology while gaining the speed of commercial innovation.
The Defense Tech Boom
The deal arrives amid a surge in defense technology investment. In the first quarter of 2026, venture capitalists deployed a record $19.8 billion into the sector across 262 deals. While approximately 10,000 new defense companies have entered the market in the past two years, startups still account for less than 1% of total Pentagon contract spending, leaving significant room for growth for firms like Code Metal.
