Microsoft just pulled off the ultimate “Ight, I’mma headout” meme, handing off its $22 billion mixed-reality headset contract with the U.S. Army to Palmer Luckey’s defense tech startup, Anduril. The contract, known as the Integrated Visual Augmentation System (IVAS), was supposed to turn Microsoft’s HoloLens into a battlefield-ready HUD for U.S. soldiers. Instead, the project has spent years burning cash, giving test subjects motion sickness, and reminding everyone why government contracts are basically legalized money bonfires.

Now, Anduril is taking over the whole operation—hardware, software, production, and delivery timelines—while Microsoft sticks around to play cloud provider, because obviously, Azure still wants a cut of the action. But let’s all be honest here, this project has been a dumpster fire wrapped in military-grade Kevlar. The first-gen IVAS headsets were a disaster, causing nausea, eye strain, and a general sense of “maybe we shouldn’t trust Microsoft to build combat gear.”

However, that’s not the only reason Microsoft is pulling out. For instance, their own employees revolted back in 2019, whining that they didn’t want to be "war profiteers." And now that Satya Nadella has a new golden child in OpenAI, he’s got zero interest in playing defense contractor when he could be pumping billions into AI hype trains instead. Translation: Microsoft’s washing its hands of this mess before it turns into an even bigger PR nightmare.

With that said, if anyone was going to pick up the IVAS project and actually make it work, it was Palmer Luckey. The guy built Oculus, sold it to Facebook for $2 billion, then turned around and started Anduril, a defense tech company that’s been printing money off military contracts ever since.

What’s more is that Luckey has been obsessed with military AR headsets for years, once bragging that soldiers would be wearing them long before civilians because, and I quote, “the stakes are much higher on the battlefield.” In other words, this is exactly the kind of project he was built for. 

(Source: Giphy) 

Plus, if you think this guy is your average defense contractor nut (looking at you, Alex Karp), think again. Luckey has spent actual time ranting about Sword Art Online, believes we’re a decade away from VR systems indistinguishable from reality, and is currently raising another $2.5 billion at a $28 billion valuation. Meaning, Raytheon is presumably punching air right now. 

Now of course, the deal still needs Pentagon approval, but in the grand scheme of things—that’s just a formality. Anduril already has deep ties with the U.S. military, and Microsoft wouldn’t be handing this over if the DOD wasn’t already on board. Meanwhile, Microsoft gets to keep selling Azure cloud services to Anduril, meaning it still gets a piece of the juicy military-industrial complex money—just without the headache of actually making the hardware work. Kinda smart imo. 

(Source: Axios) 

So yeah, Microsoft just dumped a $22B mess in Anduril’s lap, but Palmer Luckey is exactly the kind of guy who turns messes into billion-dollar defense empires. If he pulls this off, expect Anduril to become the Pentagon’s go-to for next-gen battlefield tech—and for Microsoft to keep making billions off the war machine, just from a safer distance.

For now, keep an eye on the impact of this mess as Microsoft shares are down -0.79% on the day. So with that, place your bets accordingly and stay safe and stay frosty, friends! Until next time…

P.S. Want deep dives on the hottest AI plays before the rest of the market catches on? Want to know who’s riding the hype train and who’s actually building something that won’t collapse the second the AI bubble deflates? Want the inside track on the moves that matter before they hit the front page? Then quit playing around and subscribe to Stocks.News Premium ASAP… 

Stocks.News holds positions in Microsoft as mentioned in the article.