By Dan Gabel, Chief Financial Officer

The first half of 2026 has been replete with newsworthy events in the defense technology industry, including a steady stream of AI-related announcements from the Pentagon, more than $19 billion of announced venture funding rounds for defense technology companies, and the record-breaking SpaceX IPO.

We are in the early stages of a generational transformation and recapitalization of America’s defense industrial base – a fitting time for an appraisal of where we’ve been, where we’re going, and how OSS fits into it all. 

A Recent History of the Defense Industry

In July 1993 – thirty-three years ago this month – then Secretary of Defense Les Aspen and Deputy Secretary of Defense William Perrry invited representatives of defense companies to the Pentagon for a dinner. The topic of discussion was the defense industry, and the message to the assembled business leaders was blunt: most of their companies would not survive the post-Cold War budget cuts, and the industry would need to shrink dramatically. In industry lore, this gathering would become known as the “Last Supper,” because the discussion that evening portended years of dramatic consolidation.  

At the end of the Cold War, there were more than 50 major defense companies, which included a number of commercial companies with a sizeable defense footprint. The dizzying flurry of consolidations and mergers that ensued in the 1990s created the top-heavy defense industry that has prevailed in the decades since, with four or five dedicated defense primes absorbing the majority of defense procurement spending and defining the technology and architectures of the American arsenal. 

But today, that process is becoming undone in an outburst of dynamism and innovation of which OSS has been a pioneer. This dynamism is most readily apparent in two highly visible trends: 1) the changing structure of the industry and 2) the proliferation of commercial technologies into defense applications. OSS is an exemplar of both these trends. 

Structure of Industry: The New Defense Technology Landscape

Unlike the top-heavy industry of recent decades, the emerging defense technology ecosystem is diverse and dynamic, and it’s being driven by a proliferation of companies both large and small. 

Perhaps this is most evident in venture funding for defense technology companies. In the early 2000s, venture capital funding for defense technology was almost nonexistent. Around 2020, this began to change. According to data from Crunchbase, venture funding for defense technology companies reached $1.6 billion in 2020, then climbed to $3.9 billion in 2021. It held steady at around $3 billion per year in 2022-2024. According to data from Pitchbook compiled by Bloomberg, this number exploded in 2025 – reaching $16.6 billion. Through the first half of 2026, venture funding for defense technology companies has already surpassed that previous annual record – reaching $19.2 billion (VC Money Pours Into Defense Tech in Next Big Bet - Bloomberg). 

The changing structure of industry is also apparent in public markets. According to data from StockAnalysis.com, there have been 11 IPOs of Aerospace and Defense companies since 2025 – more than in the entire 30-year period following the “Last Supper.” The SpaceX IPO – the largest public debut of any company in history – is only the most prominent example. 

This change is being driven by necessity. The top-heavy industry of the immediate post-Cold War era is simply not able to generate the pace of innovation that the current era of peer and near-peer geopolitical conflict necessitates. A more diverse industry – with many players of varying size and technological focus – is a stronger, more resilient industry. 

The emerging industry structure is not a collapse of the prior paradigm, but rather a build-out of a broad, multi-layered ecosystem in its place. It has become fashionable to disparage the legacy primes as sclerotic, lumbering behemoths. But the truth is that they are, in many ways, incredible companies. Few companies in the world have the scale, the breadth of technical talent, and the institutional process rigor to design and produce complex, sophisticated systems like Raytheon’s LTAMDS missile defense system (LTAMDS: Lower Tier Air and Missile Defense Sensor | Raytheon) or Northrop Grumman’s James Webb Space Telescope (James Webb Space Telescope | Northrop Grumman). These companies will no doubt continue to play a critical role in the emerging defense ecosystem: as world-class integrators, who can bring together multiple technologies into complex systems. 

But the technologies that they and other emerging primes integrate will increasingly come from a new set of companies, of which OSS is one – technology-forward companies that are nimble enough to bring a commercial pace to defense innovation. 

Commercial Innovation in Defense

Defense and commercial technology innovation have historically been deeply intertwined. The Internet began in a DARPA (Defense Advanced Research Projects Agency) lab; the microwave oven was the accidental invention of a Raytheon radar engineer; and the Department of Defense was among the earliest adopters of transistor and semiconductor technologies. In the Cold War era, companies like Westinghouse, Texas Instruments, General Motors, and IBM were active innovators in both defense and commercial markets. 

Following the “Last Supper” and the ensuing defense consolidation of the 1990s, however, commercial and defense innovation became increasingly bifurcated. The large defense primes focused on developing increasingly exquisite systems with limited commercial application. Meanwhile, commercial innovation took a different path – a path that would ultimately lead to the breakthroughs in compute and Artificial Intelligence that are remaking the world today. 

We are beginning to see these paths converge once again. America’s peer adversaries are leveraging commercial technologies – especially compute and AI technologies – for military applications; effective response and deterrence requires that we do as well. The United States has an inherent advantage in this competition: our commercial innovators are second-to-none. But this advantage is only meaningful if we can effectively integrate those commercial innovations into defense applications. 

The Pentagon recognizes this, and much of the emerging dynamism within the industry reflects the increasing proliferation of commercial technologies into defense applications. 

OSS as a Pioneer in the Emerging Defense Technology Landscape

OSS has been a trailblazer within the emerging defense technology ecosystem, and our company’s story and strategy have presaged and exemplified the trends that are transforming America’s defense industrial base. 

OSS’ roots are in commercial markets. The core technologies and architectures used in our compute products were originally developed for commercial datacenter applications. But we stand apart in our ability to develop the latest generations of these core technologies and architectures into systems that can be deployed – on a truck, on an airplane, on a maritime vessel, or on a combat vehicle (Defense – One Stop Systems). OSS is bringing the best of commercial innovation into defense – enabling the transformation of our military into an AI-centric force with an unfair advantage on the battlefield.

As a small – but rapidly growing – company, OSS exemplifies the new generation of defense and commercial companies that are adding dynamism to America’s defense industrial base. We are nimble and technology-forward – the ideal partner for primes seeking to integrate the latest technology into sophisticated platforms. But though nimble and growing, we also bring an operational maturity that is unique within the emerging defense technology ecosystem – including 25+ years of operating history, a NASDAQ listing since 2018, a robust balance sheet (Financials – One Stop Systems), and a track record of execution for a broad set of commercial and defense customers.

We’re living through a transformative era in defense technology, and geopolitical realities demand that this transformation only accelerate in the years to come. OSS is built for this.