Private equity firms are pouring billions into defense technology, driven by increased military spending and geopolitical tensions fueling an investment boom. According to PitchBook data, growth equity investments by private equity in the defense sector reached $4 billion in the first nine months of 2026, significantly up from $500 million in 2024. While the influx of capital has accelerated defense tech innovation, it has also raised concerns about overvaluation and speculative investments. Shonnel Malani, a managing partner at Advent International, stated there is a "huge risk" of an investment bubble emerging, noting that the market has "a lot of froth" and his firm has walked away from potential investments with "ridiculous" valuations.