Pokémon Winds and Waves Revealed, Gen 10 Starter Debates Are Live

 

# Pokémon Winds and Waves Revealed, Gen 10 Starter Debates Are Live

**Published: February 28, 2026**

You know that feeling when you've been waiting for something for years, and when it finally happens, the internet just… explodes?

That's exactly what happened yesterday.

The Pokémon Company celebrated its 30th anniversary with a Pokémon Presents livestream that finally—finally—unveiled the next generation of mainline games. **Pokémon Winds and Pokémon Waves** are coming in 2027, exclusively for the Nintendo Switch 2 .

And with them come three new starters that have already split the fanbase right down the middle.

Meet Browt, Pombon, and Gecqua—the Bean Chick, the Puppy, and the Water Gecko. The debates are already raging. Which one is the cutest? Which one will have the best evolutions? Which one are YOU picking on day one?

Let me walk you through everything we know about Gen 10, the new starters, and why the internet is already losing its collective mind over a tiny gecko.

---

## The Short Version: What You Need to Know

**The games:** Pokémon Winds and Pokémon Waves, the 10th generation of mainline Pokémon games, were officially announced during the Pokémon Day 2026 Pokémon Presents livestream on February 27 .

**The release window:** Sometime in 2027, exclusively for the Nintendo Switch 2 .

**The setting:** A tropical region of "windswept islands and a vast, glittering ocean" inspired by Southeast Asian archipelagos .

**The new starters:**

- **Browt** (Grass) – The Bean Chick Pokémon. Lively but a bit clumsy.

- **Pombon** (Fire) – The Puppy Pokémon. Guileless and friendly.

- **Gecqua** (Water) – The Water Gecko Pokémon. Highly intelligent and a bit dramatic.

**The early favorite:** Gecqua is currently running away with the popularity contest, but the debates are just getting started .

**What else we got:** Pokémon Champions (April 2026), Pokémon Pokopia (March 5, 2026), and Pokémon XD: Gale of Darkness coming to Switch 2 via NSO .

---

## The 30th Anniversary Celebration: A Quick Recap

Before we dive into the Gen 10 news, it's worth stepping back and appreciating the moment.

Pokémon Red and Green launched in Japan on February 27, 1996. Thirty years later, the franchise has become the highest-grossing media franchise in the world, spanning games, trading cards, anime, movies, and more .

The Pokémon Day 2026 presentation was packed with announcements :

- **Pokémon Champions** – A competitive-focused battle game coming to Switch in April 2026, with mobile version later .

- **Pokémon Pokopia** – A "cozy" life-sim spin-off launching March 5, 2026 on Switch 2 .

- **Pokémon XD: Gale of Darkness** – The GameCube classic hits Switch 2 via NSO in March .

- **Mega Garchomp Z** – A new Mega Evolution revealed for Pokémon Legends: Z-A .

- **Pokémon TCG** – A celebratory expansion with global simultaneous launch coming in 2026 .

But let's be honest: the main event was always going to be Gen 10.

---

## Pokémon Winds and Waves: The Setting

The new games take place in a region that looks absolutely stunning. Early leaks from last year's Game Freak "teraleak" had suggested a Southeast Asian-inspired setting, and those leaks have now been confirmed .

**The official description from The Pokémon Company:** "Beautiful windswept islands and a vast ocean with glittering waves" .

The reveal trailer showed off sandy beaches, lava-filled caverns, lush tropical jungles, and what looks like an absolutely massive open world to explore . And because these are Switch 2 exclusives, the visual leap is real. This is the best-looking Pokémon game we've ever seen .

**Version differences:** Your character's outfit will change depending on which version you play—Winds or Waves—adding a small but meaningful touch of uniqueness .

**The Pikachu variants:** The trailer also teased two special Pikachu sporting tropical vacation looks. They're called **Mr. Windychu** and **Ms. Wavychu**, and they'll apparently play an important role in the player's adventure .

**Language support:** For the first time, the games will officially support Brazilian Portuguese as a selectable language .

---

## The Starters: Meet the Trio

Now for what you actually came here for.

**Table 1: Pokémon Gen 10 Starters – Official Stats**

| **Pokémon** | **Type** | **Category** | **Height** | **Weight** | **Ability** | **Description** |

| :--- | :--- | :--- | :--- | :--- | :--- | :--- |

| **Browt** | Grass | Bean Chick Pokémon | 1′ (0.3 m) | 7.7 lbs (3.5 kg) | Overgrow | This Pokémon runs about energetically while photosynthesising using the leaves on its brow. It's lively, but it can also be a bit clumsy . |

| **Pombon** | Fire | Puppy Pokémon | 1′4″ (0.4 m) | 14.8 lbs (6.7 kg) | Blaze | The area below its throat glows faintly from the heat-generating organ within its lungs. This Pokémon is guileless and friendly . |

| **Gecqua** | Water | Water Gecko Pokémon | 1′ (0.3 m) | 9.5 lbs (4.3 kg) | Torrent | This Pokémon launches springy balls of water from its tail. Gecqua is very intelligent and maneuvers shrewdly while putting on airs . |

---

## The Early Favorite: Why Gecqua Is Winning

If you've been on social media at all in the past 24 hours, you've seen it: the Gecqua hype train is already at full speed.

**Olivia Richman at The Escapist** put it bluntly: "the only thing I cared about was Gecqua" . She's not alone.

**Why Gecqua?** Several reasons:

1. **The design.** It's a tiny gecko with big, expressive eyes and what can only be described as "attitude." The official description says it "maneuvers shrewdly while putting on airs"—basically, it's a drama queen in lizard form. Fans love that.

2. **The "slay" factor.** Back in January, a leaker described the Water starter as the one that "absolutely serves and slays" . That description went viral, and now that we've actually seen Gecqua, it fits perfectly.

3. **The evolution potential.** Early leaks describing the final evolutions suggested that Gecqua's evolution is the "total standout" of the trio . While we haven't seen the evolutions yet, that leak has given Gecqua an early edge.

4. **The history of Water starters.** Water-type starters have a strong track record. Mudkip, Totodile, Froakie—some of the most beloved starters of all time are Water types. Gecqua is already being mentioned in the same breath.

**The Eurogamer team** has already picked sides, with one writer declaring Pombon their personal favorite . But in the comments and on social media, Gecqua is running away with it.

---

## The Case for Pombon: The Fire Puppy

Don't count Pombon out just yet.

Fire-type starters have historically been the most popular. Charizard. Typhlosion. Infernape. Cinderace. The pattern is clear: people love their fire types.

**Pombon's advantages:**

- **It's a puppy.** Literally. The "Puppy Pokémon" category and the description "guileless and friendly" are basically designed to tug at heartstrings . This is the starter for everyone who's ever wished they could have a Growlithe from the beginning.

- **The glow effect.** The description mentions its throat glowing faintly from the heat-generating organ in its lungs. That's a visual detail that could look amazing in-game and in battle animations.

- **The cute factor.** The leaker who described the starters back in January called the Fire-type "extremely cute" and predicted it would be a "fan favorite" . So far, that prediction is holding up.

- **The dog lover demographic.** Let's be real—there's a huge segment of the Pokémon fanbase that picks starters based on "which one would make the best pet." Pombon is the clear winner there.

---

## The Case for Browt: The Underdog

Poor Browt. The Grass-type starter always has the hardest road.

Grass types have historically been the least popular starter choice. They have more type disadvantages early game, and their designs often get labeled as "underwhelming" compared to their flashier Fire and Water counterparts.

**Browt's situation:**

The leaker from January described the Grass starter as "kinda goofy or underwhelming at first, but it grows on you" . And honestly? That's exactly the reaction Browt is getting.

It's a tiny green bird with what looks like a permanent scowl and leaves growing out of its forehead. It's not conventionally cute like Pombon or stylish like Gecqua. But there's something endearing about it.

**The "derpy" charm:** The same leaker used the word "derpy" to describe it . And in the Pokémon fandom, "derpy" can be a compliment. Some of the most beloved Pokémon of all time—Wooper, Psyduck, Slowpoke—owe their popularity to being a little goofy.

**The redemption arc:** If the evolution leaks are accurate, Browt's final form will be the one that "grows on you" . That suggests a Magikarp-style journey from underwhelming to awesome. And players love that narrative.

---

## The Evolution Leaks: What We (Might) Know

Here's where we have to put on our skeptical hats.

Back in January, a leaker described the Gen 10 starter evolutions based on what they claimed to have seen :

- **Grass:** Kinda goofy or underwhelming at first, but it grows on you (also described as derpy).

- **Fire:** Extremely cute, has all the makings of a fan favorite.

- **Water:** Absolutely serves and slays, total standout.

Given that the leaker's descriptions of the base forms were spot-on (they called Browt "derpy," Pombon "extremely cute," and Gecqua the one that "serves"), there's reason to believe the evolution descriptions might be accurate too .

But we should still take this with a grain of salt. As **VICE** noted, even if the leak is real, it's one person's opinion of the designs . "Serves and slays" is subjective.

**What we don't know:** The actual typing of the final evolutions. Will they stay pure Grass/Fire/Water, or will they gain secondary types? Will any of them end up on two legs (the eternal fear of starter fans)? We'll have to wait for more info.

---

## The Fan Reaction: Social Media Melts Down

As you'd expect, the Pokémon fanbase has Opinions.

**The Gecqua stans** are already claiming victory. "Gecqua is literally perfect and I would die for them" is a sentiment you'll see repeated across Twitter, Reddit, and Discord. The "serves and slays" meme is already in full effect.

**The Pombon defenders** are fighting back. "Pombon is the goodest boy and anyone who picks Gecqua is just being trendy" is the general vibe.

**The Browt fans** are quieter, but they're there. There's a certain pride in picking the underdog. "Browt will have the best evolution, just wait" is the rallying cry.

**The "wait for evolutions" crowd** is playing it smart. They remember the Sobble line—cute little crying lizard that evolved into an absolute assassin. They remember the Fuecoco line—goofy croc that became a Day of the Dead skeleton. They're not committing until they see the full picture.

**The competitive players** are already theorycrafting. What abilities will they have? What moves? What stats? The debates will only intensify as we get closer to 2027.

---

## What Else We Learned About Gen 10

Beyond the starters, the Pokémon Day presentation gave us some additional details about Winds and Waves.

### The Region

The new region is officially unnamed (at least for now), but it's clearly inspired by Southeast Asian archipelagos . The trailer showed:

- Sandy beaches and tropical waters

- Lush jungles with ancient ruins

- Volcanic areas with lava flows

- Wind-swept islands connected by waterways

The emphasis on "winds and waves" suggests that weather and water exploration will play a major role .

### The Open World

Like Scarlet and Violet before them, Winds and Waves will feature a vast open world to explore . But with the power of the Switch 2, it should run significantly better than its predecessor.

### The Pikachu Variants

Mr. Windychu and Ms. Wavychu are officially a thing. They're Pikachu dressed in tropical vacation outfits—think leis, floral prints, maybe some sunglasses. According to the trailer, they'll play an "important role" in the adventure .

What that role is remains a mystery. Are they gift Pokémon? Ride Pokémon? Something else entirely?

### The Timeline

The games are launching in 2027. That's a long wait—the longest gap between generations since the transition from Gen 2 to Gen 3 . But given the visual leap and the Switch 2 exclusivity, it's probably worth it.

---

## The Other Big Announcements

While Gen 10 was the headline, there was plenty more to get excited about.

### Pokémon Champions (April 2026)

A new competitive-focused battle game coming to Switch in April, with a mobile version later . It will connect to Pokémon HOME, allowing you to bring your Pokémon from other games to battle . This could be huge for the competitive scene.

### Pokémon Pokopia (March 5, 2026)

A "cozy" life-sim spin-off where you build a town for Pokémon . Think Animal Crossing meets Pokémon. It supports up to four players and launches on Switch 2 next week .

### Pokémon XD: Gale of Darkness (March 2026)

The GameCube classic is coming to Switch 2 via Nintendo Switch Online + Expansion Pack . A generation of players who missed it the first time can finally experience this cult favorite.

### Mega Garchomp Z

A new Mega Evolution revealed for the Pokémon Legends: Z-A – Mega Dimension DLC . Players can encounter it through a special Mystery Gift event starting today .

---

## What This Means for Different People

### If You're a Longtime Fan

You've been waiting for this. Four years since Gen 9, and we finally have a new generation to look forward to. The 30th anniversary celebration is real, and the future of Pokémon looks brighter than ever.

### If You're a Starter Debater

The next year is going to be glorious. Between now and 2027, we'll get more info, more trailers, and eventually the first look at evolutions. The debates will rage on. Pick your side and defend it to the death.

### If You're a Competitive Player

Pokémon Champions coming in April gives you something to do while waiting for Gen 10. And when Winds and Waves finally arrive, you'll have a whole new meta to figure out.

### If You're Just Excited for New Pokémon

That's the beauty of this moment. Three new friends to meet. A new world to explore. New adventures waiting. It's what Pokémon has always been about.

---

## Frequently Asked Questions

**Q: When will Pokémon Winds and Waves be released?**

A: Sometime in 2027. No specific date has been announced yet .

**Q: What console will they be on?**

A: Exclusively on Nintendo Switch 2 .

**Q: What are the new starters?**

A: Browt (Grass-type Bean Chick), Pombon (Fire-type Puppy), and Gecqua (Water-type Water Gecko) .

**Q: Which starter is the most popular right now?**

A: Based on early fan reaction, Gecqua (the Water gecko) is currently the favorite. But the debates are just getting started .

**Q: Do we know what their evolutions look like?**

A: Not officially. There are leaks from January describing the evolutions, but nothing has been confirmed .

**Q: What's the setting of the new games?**

A: A tropical region inspired by Southeast Asian archipelagos, with "windswept islands and a vast, glittering ocean" .

**Q: What about the Pikachu variants?**

A: Mr. Windychu and Ms. Wavychu are special Pikachu in tropical vacation outfits. They'll apparently play an important role in the adventure .

**Q: Will there be a new battle gimmick?**

A: Nothing has been announced yet. The "teraleak" from 2024 mentioned something called "Majin" tied to weather effects, but that hasn't been confirmed .

**Q: Can I transfer my old Pokémon to these games?**

A: Almost certainly, through Pokémon HOME. That's been standard for several generations now.

**Q: What else was announced during Pokémon Day?**

A: Pokémon Champions (April 2026), Pokémon Pokopia (March 5, 2026), Pokémon XD: Gale of Darkness coming to Switch 2 via NSO, Mega Garchomp Z for Pokémon Legends: Z-A, and more .

---

## The Bottom Line

Here's what I keep coming back to.

After four long years, we finally have a new generation to look forward to. The 10th generation of Pokémon is real, and it's coming in 2027 on the Switch 2. The tropical setting looks gorgeous. The visual leap is significant. And the three new starters have already given us something to argue about for the next year.

**The debates are just beginning.** Browt, Pombon, or Gecqua? Which one will you choose? Which one will have the best evolution? Which one will end up competitively viable? These questions will fuel countless forum threads, YouTube videos, and Twitter arguments between now and launch.

**Gecqua has the early lead.** The "serves and slays" leak, combined with a genuinely great design, has made the Water gecko the early fan favorite . But Pombon's puppy energy and Browt's underdog charm mean this race is far from over.

**The wait is long, but worth it.** 2027 feels like forever from now. But with Pokémon Champions coming in April and Pokopia in March, we have plenty to keep us busy in the meantime.

For now, though, let's enjoy this moment. The 30th anniversary of Pokémon. The reveal of Gen 10. The first glimpse of three new friends we'll spend years getting to know.

The debates are live. Pick your side. And may the best starter win.

---

*Got thoughts on the new starters? Team Gecqua, Team Pombon, or Team Browt? Drop a comment and let me know.*

Paramount-Warner Bros. Deal Stir Fears About What It Means for CNN: 'Devastated' Staff Brace for Change

 

# Paramount-Warner Bros. Deal Stir Fears About What It Means for CNN: 'Devastated' Staff Brace for Change

**Published: February 28, 2026**

You know that feeling when you're watching a movie and the guy you thought was the hero suddenly gets taken over by the villain? Everything looks the same on the outside, but you know something fundamental has shifted.

That's how a lot of people at CNN are feeling right now.

The bombshell announcement that Paramount Skydance has officially won the bidding war for Warner Bros. Discovery—beating out Netflix with a **$110 billion mega-merger**—has sent shockwaves through the media world . But nowhere are those shockwaves felt more acutely than inside CNN's newsrooms .

For the journalists at CNN, this isn't just another corporate merger. It's an existential crisis. The network that built its brand on independent, hard-hitting journalism is about to be owned by the same family that now controls CBS News—a family with deep ties to President Donald Trump and a track record of reshaping newsrooms in ways that have employees terrified .

Let me walk you through what this deal actually means for CNN, why staffers are described as "devastated," and what the future might hold for one of America's most influential news networks .

---

## The Short Version: What You Need to Know

**The deal:** Paramount Skydance has acquired Warner Bros. Discovery for **$110 billion**, beating Netflix in a bitter five-month bidding war . The deal is expected to close in the third quarter of 2026, pending regulatory approval .

**What it means for CNN:** The network will now sit under the same corporate umbrella as CBS News, which has already undergone significant changes under Paramount's ownership .

**The political angle:** Paramount CEO David Ellison and his father, Oracle billionaire Larry Ellison, are longtime allies of President Donald Trump. Trump has repeatedly called for CNN to be sold, calling the network's previous leadership "shameful" .

**The Bari Weiss factor:** Weiss, a conservative commentator handpicked by Ellison to run CBS News, is seen by many as a potential influence over CNN's future direction .

**Staff reaction:** CNN employees are described as "devastated" by the news, with palpable "dread" about what comes next . One person familiar with the network told Yahoo Finance: "No one is happy" .

**The $6 billion question:** Paramount has promised investors it will find **$6 billion in cost "synergies"** —corporate-speak that typically means layoffs and consolidation .

---

## The Deal That Changed Everything

To understand why CNN staffers are so anxious, you need to understand the deal itself.

On February 27, Paramount Skydance formally signed an agreement to acquire Warner Bros. Discovery, ending a saga that began back in December when Netflix first announced it would buy Warner's studio and streaming assets for about $83 billion . The Paramount offer—**$31 per share in cash**, valuing the combined company at $110 billion—proved too rich for Netflix, which walked away rather than overpay .

**The key difference:** Netflix only wanted Warner's studio and streaming assets. Under that plan, CNN and other cable networks would have been spun off into a separate company .

Paramount, by contrast, wanted **the whole package**—studio, streaming, and crucially, CNN .

That distinction is everything. Instead of becoming an independent company, CNN now becomes part of a sprawling media empire that already includes CBS News, MTV, Nickelodeon, and Comedy Central . And for employees who've watched what happened to CBS News under Paramount's ownership, that's not a comforting thought.

---

## The Ellison Factor: Politics and Power

Here's where this story gets deeply political.

David Ellison, the 43-year-old CEO of Paramount Skydance, is the son of Larry Ellison, the Oracle billionaire and one of the richest men in the world. The elder Ellison is also a **longtime ally of President Donald Trump** .

When Trump addressed Congress on February 24 for his State of the Union speech, David Ellison was sitting in the audience . That's not nothing.

Trump himself has been crystal clear about his feelings toward CNN. In December, he called the network a purveyor of "poison and lies" and said the people running it were "shameful." His conclusion: "I think selling CNN is imperative" .

Now, thanks to this deal, CNN is being sold—to a family with direct ties to the president who has spent years attacking the network.

**The Wall Street Journal reported in December** that Ellison had assured Trump administration officials that if he acquired CNN, he would "overhaul" it .

Paramount declined to comment on that report. But the Ellisons haven't exactly hidden their leanings. Larry Ellison is a major Trump donor and ally . The family's political connections are not a secret.

---

## What Happened at CBS News: A Preview?

To understand what might happen at CNN, you need to look at what's already happened at CBS News.

When Paramount acquired full control of CBS last year, David Ellison moved quickly to reshape the news division. His most significant move: installing **Bari Weiss** as editor-in-chief .

Weiss is a former New York Times opinion journalist who founded The Free Press, a media outlet that positions itself against what she sees as liberal bias in mainstream media. She's been praised by Donald Trump and has articulated a vision for news that attracts a more centrist—and implicitly more conservative—audience .

Under Weiss, CBS News has undergone significant changes:

- **"60 Minutes" controversies:** Weiss reportedly asked the flagship program to hold a story critical of Trump's immigration policies to seek more response from the administration. The story eventually ran a month later .

- **Management shakeups:** Multiple management changes have created what staffers describe as a difficult work environment .

- **Viewership declines:** "CBS Evening News" with Tony Dokoupil drew about 4.17 million viewers last week—down 10% from the same period last year. "CBS Mornings" is down 14% .

- **Talent departures:** Anderson Cooper announced earlier this month he would leave his position as a "60 Minutes" correspondent after two decades—a move widely interpreted as dissatisfaction with the new direction .

**One staffer's fear, shared with The Guardian:** that Weiss could eventually take control of CNN as well .

Seth Stern, chief of advocacy at the Freedom of the Press Foundation, put it bluntly: "Ellison will readily throw the first amendment, CNN's reporters and HBO's film-makers under the bus if they stand in the way of expanding his corporate empire and fattening his pockets" .

---

## The Mood at CNN: 'Devastated' and 'Dreading' What's Next

If you're looking for a single word to describe the mood inside CNN right now, multiple reports converge on the same term: "devastated" .

According to three people familiar with the network cited by Yahoo Finance:

- "No one is happy" 

- There is "palpable dread among staffers" 

- Employees fear the network's "financial health" and "journalistic independence" are both at risk 

This isn't a network that's unfamiliar with turbulence. CNN employees have weathered:

- A sale to AT&T

- Two adversarial terms of the Trump presidency

- A Biden White House that often avoided the press

- A sale to Discovery

- Multiple changes in leadership

- Several rounds of layoffs

But this feels different. Because this time, the new owner isn't just another corporate parent—it's one with a stated political orientation and a track record of reshaping newsrooms to match it.

**CNN's own media analyst, Brian Stelter**, wrote on Friday: "CNN employees and viewers have serious concerns about whether Paramount CEO David Ellison will uphold the news network's editorial independence amid severe political turbulence" .

---

## The Numbers: CNN's Business Reality

It's not just about politics. CNN's business fundamentals also raise questions about what a cost-conscious new owner might do.

Under Jeff Zucker's leadership, CNN was a profit machine, generating **$1 billion in annual profit** . Today, according to a January SEC filing by Warner Bros. Discovery, the network is expected to produce adjusted operating profit of around **$600 million** .

That's a 40% decline.

CNN's projected revenue for 2026 is **$1.8 billion**, with hopes to grow to $2.2 billion by 2030 through its new subscription service, CNN All Access . But that's not guaranteed. The core business is actually projected to decline at a **-4% compound annual growth rate** over the next four years .

In other words, CNN is a business in transition, with declining linear revenue and an unproven digital future. In a merger where the new owners have promised investors **$6 billion in cost "synergies,"** that's a worrying combination .

---

## The $6 Billion Question: What Gets Cut?

Whenever media companies merge, the promise of "synergies" inevitably means layoffs, consolidation, and cost-cutting.

Paramount has committed to finding **$6 billion in savings** from combining the two companies . The sources of those savings are expected to include:

- Technology integration

- Corporate efficiencies

- Streamlining operations

**Translation:** Duplicate roles will be eliminated. Back-office functions will be consolidated. And in news, that often means combining resources, sharing content, and—inevitably—reducing headcount.

For CNN staffers, the fear is that cost-cutting will intersect with editorial direction. If you're trying to save money and reshape the newsroom's tone at the same time, the result could be a network that looks very different from the one Ted Turner founded 45 years ago.

---

## The Regulatory Road: Not a Done Deal Yet

Before any of this happens, the deal still needs to clear regulatory hurdles.

California Attorney General Rob Bonta has made it clear he intends to fight. "Paramount/Warner Bros is not a done deal," Bonta posted on X. "These two Hollywood titans have not cleared regulatory scrutiny — the California Department of Justice has an open investigation, and we intend to be vigorous in our review" .

Bonta's concerns echo those of Senator Elizabeth Warren, who called the deal an "antitrust disaster" and warned that "a handful of Trump-aligned billionaires are trying to seize control of what you watch and charge you whatever price they want" .

The deal also faces review from:

- The European Commission

- Several other U.S. states

- Potentially federal regulators

To smooth the path, Paramount has offered a massive **$7 billion regulatory termination fee** —money it will pay Warner if the deal falls apart due to government opposition . That's a sign of confidence, but also a measure of how high the stakes are.

---

## What Mark Thompson Told Staff

In the midst of all this uncertainty, CNN CEO Mark Thompson has tried to calm nerves.

In a memo to staff, Thompson urged employees not to jump to conclusions. "Despite all the speculation you've read during this process, I'd suggest that you don't jump to conclusions about the future until we know more," he wrote .

His message: "Let's continue to focus on delivering the best possible journalism to the millions of people who rely on us all around the world" .

It's the kind of message leaders send when they're trying to keep people focused on the work rather than the anxiety. But for employees who've watched what happened at CBS News, it's cold comfort.

---

## The Historical Perspective: CNN at 45

CNN was founded in 1980 by media pioneer Ted Turner, who created the first 24-hour cable news network and revolutionized how Americans consume news . For 45 years, through multiple owners and countless challenges, the network has maintained a commitment to straightforward, non-partisan journalism.

**Tom Johnson, who ran CNN in the 1990s,** put it simply: "Since Ted Turner founded it in 1980, CNN has provided viewers with news they can trust. Accurate, fair news. I sincerely hope that CNN's new owners will maintain its editorial independence and excellence. But I deeply fear he may not be able to" .

That fear is now shared by hundreds of journalists inside the network.

---

## What This Means for Different People

### If You're a CNN Employee

The next year is going to be difficult. The deal won't close until the third quarter at the earliest, meaning months of uncertainty ahead. Cost-cutting is coming. Whether it comes with a change in editorial direction remains to be seen, but the CBS News precedent suggests it might.

### If You're a CNN Viewer

The network you've watched for years may start to feel different. New ownership often brings new priorities, new talent, and new programming. Whether that's good or bad depends on what you're looking for.

### If You Care About News Independence

This deal raises fundamental questions about whether a news organization can remain independent when its owner has direct political ties to the president. Those questions won't be answered quickly or easily.

### If You're Just Watching

You're witnessing one of the most consequential media mergers in history. Two of Hollywood's last five major studios are combining. A major news network is changing hands. The political and economic stakes couldn't be higher.

---

## Frequently Asked Questions

**Q: What does the Paramount-Warner deal mean for CNN?**

A: CNN will become part of the same corporate family as CBS News, under the ownership of the Ellison family, which has close ties to President Trump. Staffers fear the network's editorial independence could be compromised .

**Q: Who is David Ellison?**

A: He's the CEO of Paramount Skydance, son of Oracle billionaire Larry Ellison, and a close ally of President Trump. He was in the audience for Trump's February State of the Union address .

**Q: Who is Bari Weiss, and why does she matter for CNN?**

A: Weiss is a conservative commentator handpicked by Ellison to run CBS News. Staffers fear she could eventually take a similar role at CNN .

**Q: What did President Trump say about CNN?**

A: Trump has repeatedly attacked CNN, calling its coverage "poison and lies" and saying in December that "selling CNN is imperative" .

**Q: How are CNN employees reacting?**

A: Staffers are described as "devastated" and "dreading" what comes next. One person familiar with the network said: "No one is happy" .

**Q: What happened at CBS News under Ellison?**

A: CBS News has seen management shakeups, viewership declines, and controversies at "60 Minutes" under new leadership. Anderson Cooper recently stepped down as a "60 Minutes" correspondent, a move seen as dissatisfaction with the new direction .

**Q: Can the deal still be blocked?**

A: Yes. California Attorney General Rob Bonta has an open investigation and has promised a "vigorous" review. The deal also faces scrutiny from the European Commission and other regulators .

**Q: When will the deal close?**

A: The companies expect the deal to close in the third quarter of 2026, assuming regulatory approval .

**Q: How much is Paramount paying?**

A: $31 per share in cash, valuing the deal at $81 billion in equity and $110 billion including debt .

**Q: What does this mean for CNN's programming?**

A: Too early to say. But with $6 billion in promised cost savings and a new owner with clear political ties, changes are almost certain.

---

## The Bottom Line

Here's what I keep coming back to.

CNN has been through a lot. Multiple owners. Multiple leadership changes. Multiple rounds of layoffs. Through it all, the network has maintained a commitment to straightforward journalism that's made it a trusted source for millions of Americans.

This feels different.

For the first time, CNN will be owned by a family with direct political ties to a sitting president—one who has spent years attacking the network as "shameful" and its coverage as "poison." For employees who watched what happened at CBS News under the same ownership, the precedent is not reassuring.

**The staffers** are "devastated" and "dreading" what comes next .

**The former CNN president** Tom Johnson "deeply fears" the new owners may not maintain editorial independence .

**The Freedom of the Press Foundation** warns that Ellison will throw journalists "under the bus" if they stand in the way of his corporate ambitions .

**CNN's own media analyst** says employees and viewers have "serious concerns" about the network's future .

Will those fears be realized? Nobody knows yet. The deal hasn't closed. Regulators haven't signed off. CNN's leadership is urging calm.

But for a network built on the principle of independent journalism, the anxiety is understandable. When your new owner is allied with the president who's spent years attacking you, it's hard not to worry about what comes next.

---

*Got thoughts on the Paramount-Warner deal? Worried about CNN's future? Drop a comment and let me know.*

Dow Jones Futures: Trump's Anthropic Move Hits Market ETFs; Don't Forget S&P 500's Hottest Stocks

 

# Dow Jones Futures: Trump's Anthropic Move Hits Market ETFs; Don't Forget S&P 500's Hottest Stocks

**Published: February 28, 2026**

You know that feeling when the ground shifts beneath your feet, and suddenly everything you thought you knew about the market needs a second look?

That's where we are right now.

President Trump's Friday afternoon bombshell—ordering all federal agencies to immediately cease using Anthropic's technology—has sent shockwaves through an already jittery market . The AI sector, already split between hardware winners and software losers, just got a whole lot more complicated.

But here's the thing about markets: even when headlines are scary, there's always money being made somewhere. And while the software ETFs are getting hammered, the S&P 500's hottest stocks—the ones tied to AI hardware and memory—are absolutely on fire.

Let me walk you through what's happening, why the Anthropic news matters, and where you should be looking if you want to find the stocks that are actually working right now.

---

## The Short Version: What You Need to Know

**The Anthropic bombshell:** President Trump ordered all federal agencies to "IMMEDIATELY CEASE all use of Anthropic's technology," and the Pentagon designated the company a "supply chain risk" after it refused to drop safeguards against mass surveillance and autonomous weapons .

**The market impact:** Software stocks, already under pressure from AI disruption fears, are getting hit again. IBM dropped 13% earlier this week after Anthropic's Claude Code threatened its COBOL modernization business . The software ETF selloff is the worst since 2008 .

**The other side of the trade:** While software crumbles, memory and hardware stocks are crushing it. SanDisk (SNDK) is up 160% year-to-date. Western Digital (WDC) has gained nearly 70%. Teradyne (TER) is up 60% .

**The Goldman framework:** The bank's analysts have coined the "HALO effect"—heavy assets, low obsolescence. Companies with physical infrastructure, factories, and hard assets are winning. Labor-light software companies are losing .

**What to watch:** Nvidia earnings are behind us, but the rotation is still playing out. The S&P 500's hottest stocks right now are the ones selling picks and shovels to the AI revolution, not the ones selling software that AI might replace.

---

## The Trump-Anthropic Showdown: What Just Happened

Let's start with the news that's dominating Friday's headlines.

On February 27, President Trump took to Truth Social with a message that left no room for interpretation:

"I am directing EVERY Federal Agency in the United States Government to IMMEDIATELY CEASE all use of Anthropic's technology. We don't need it, we don't want it and will not do business with them again! Anthropic better get their act together and be helpful during this phase out period, or I will use the Full Power of the Presidency to make them comply, with major civil and criminal consequences to follow" .

Defense Secretary Pete Hegseth followed up with an even more aggressive statement, announcing that the Pentagon would designate Anthropic a "supply chain risk to national security"—a label typically reserved for companies with direct ties to foreign adversaries .

### Why This Happened

The conflict stems from Anthropic's refusal to agree to "any lawful use" of its Claude models. The company insisted on maintaining two core safeguards:

1. No use of its AI for mass domestic surveillance of Americans

2. Human responsibility for the use of force, including autonomous weapons

The Pentagon gave Anthropic a deadline of Friday at 5:01 PM to drop these restrictions. Anthropic held firm. Hours later, the hammer fell .

**Anthropic's response:** The company said it will challenge the designation in court, calling it "both legally unsound and a dangerous precedent for any American company that negotiates with the government" .

### The Irony

Here's where it gets interesting. OpenAI, Anthropic's chief rival, signed a deal with the Pentagon on Friday that reportedly includes the same restrictions Anthropic was punished for demanding . OpenAI CEO Sam Altman said the Department of War "agrees with these principles" and "reflects them in law and policy" .

So one company gets blacklisted for demanding safeguards. Another gets a contract for asking for the same thing. That's the market we're navigating right now.

---

## The Market Reaction: Software Gets Hammered, Again

The Anthropic news lands in a market that's already deeply nervous about AI disruption.

### The Software Selloff

Over the past month, Anthropic has released four products that have sent software stocks into a tailspin:

**Table 1: Anthropic's Market-Moving Product Launches**

| **Date** | **Product** | **Impact** |

| :--- | :--- | :--- |

| Jan 30 | Legal AI tool | Thomson Reuters -16%, LegalZoom -20% |

| Feb 5 | Claude Opus 4.6 | FactSet -7.2%, software index -4% |

| Feb 21 | Claude Code Security | CrowdStrike -6.5%, cybersecurity stocks hammered |

| Feb 23 | COBOL modernization tool | IBM -13.2% (worst day since 2000) |

*Sources: *

Goldman Sachs' software basket has now posted its seventh consecutive daily decline in early February, bringing its year-to-date loss to 19% . The Nasdaq 100 is down 1.4% so far in 2026 .

**The core fear:** If AI can do the work that software companies charge for, why keep paying for software licenses? It's a simple question with terrifying implications for the SaaS business model.

### The Broader Market Picture

The selloff isn't just about AI. It's layered on top of renewed trade war fears. The Supreme Court recently struck down Trump's global tariff authority, but the president responded by threatening a 15% temporary tariff on all imports anyway .

The combination has created a "sell first, assess later" mentality. As Tom Hainlin, national investment strategist at U.S. Bank Wealth Management, put it: "You've seen the market react to headlines, it's 'sell first, assess later.' It's a perspective of what may happen as opposed to what has happened" .

**The numbers:**

- Dow Jones Industrial Average: down over 800 points on Monday alone 

- S&P 500: off more than 1% 

- Nasdaq Composite: down over 1% 

- Financial stocks: off 3.3% 

- Software-related firms: slid 4.3% 

---

## The Other Side: S&P 500's Hottest Stocks

Here's where the "Don't Forget" part of our title comes in. While software gets hammered, there's a whole universe of stocks that are absolutely crushing it.

### The Memory Chip Boom

The AI buildout requires massive amounts of memory. NAND prices are rising rapidly. Data centers, cloud providers, and edge devices all need more high-speed storage. And three stocks are benefiting in a huge way.

**Table 2: The Hottest S&P 500 Stocks of 2026**

| **Stock** | **Ticker** | **YTD Return** | **What They Do** |

| :--- | :--- | :--- | :--- |

| SanDisk | SNDK | +160% | NAND flash memory for AI data centers |

| Western Digital | WDC | +70% | Hyperscale storage solutions, 20% stake in SNDK |

| Teradyne | TER | +60% | Chip testing equipment for AI accelerators |

*Source: *

**SanDisk (SNDK):** Up 160% in just two months. The company's revenue acceleration tells the story: sales of $3.0 billion climbed 61% year-over-year in its latest quarter. Full-year estimates have jumped 50% over the last year .

**Western Digital (WDC):** After being one of 2025's top performers, WDC is up another 70% in 2026. The company's cash-generating abilities have surged, with free cash flow of $653 million in its latest quarter, up 125% year-over-year .

**Teradyne (TER):** Up 60% year-to-date. The company makes equipment used to test chips, and with AI chips among the most complex on the market, demand for testing is exploding. Recent quarterly results came in above the high-end of previous guidance .

All three stocks sport the coveted Zacks Rank #1 (Strong Buy) .

### Why They're Winning

These companies aren't selling software that AI might replace. They're selling the physical infrastructure that makes AI possible. SanDisk's NAND flash, Western Digital's storage solutions, Teradyne's testing equipment—these are the picks and shovels of the AI gold rush.

As one analyst put it, "AI is driving a huge surge in storage demand" . That demand shows no signs of slowing.

---

## Goldman Sachs's Framework: The HALO Effect

To understand why some stocks are winning while others are losing, Goldman Sachs has developed a useful framework.

### The HALO Effect

Goldman's strategists have named this dynamic the "HALO effect"—standing for **heavy assets and low obsolescence** .

According to Goldman's client note, authored by strategists including Guillaume Jaisson and Peter Oppenheimer, the bank's basket of capital-intensive stocks has outperformed a capital-light group by about **35% since the start of 2025** .

What counts as "HALO" businesses?

- Grids and pipelines

- Utilities

- Transport infrastructure

- Critical machinery

- Factories with physical supply chains

These are assets that are costly to replicate and less exposed to technological obsolescence. No AI model can shortcut the timeline required to build a factory or lay pipeline .

### The Two Metrics That Matter

Goldman's approach relies on two specific screens:

**1. Labor cost as a share of revenue.** The bank's company-level metric estimates exposure to AI automation by analyzing job functions and overlaying them with task-level measures of AI capability. Software, professional services, banks, and media rank as the most at-risk sectors .

**2. Physical asset density.** Businesses anchored to factories, distribution networks, or precision manufacturing equipment carry a natural moat. Those operations take years to replicate .

### European Examples

Goldman's European capital-intensive favorites include:

- **ASML (ASML):** Monopoly on extreme ultraviolet chip lithography equipment

- **Airbus:** Commercial aircraft assembly requiring years of precision engineering

- **Safran:** Long-cycle aerospace contracts with strong revenue visibility

- **LVMH:** Luxury brand dominance backed by physical craftsmanship

- **Air Liquide:** Industrial gas infrastructure built over decades

### The Hyperscalers Join the Club

Interestingly, the big tech companies are themselves becoming capital-intensive plays. Amazon, Microsoft, Alphabet, Meta, and Oracle are on track to spend **$1.5 trillion building AI infrastructure between 2023 and 2026** —roughly twice what they invested across their entire history before 2022 .

In 2026 alone, their capex is on track to exceed **$650 billion** .

---

## The Software Survivors

Not all software companies are doomed. Goldman has been deliberate about distinguishing the ones that will weather this shift from those that won't.

### Software Winners

**Microsoft (MSFT):** Cloud and AI infrastructure that virtually every large enterprise depends on, with switching costs that make displacement extremely difficult .

**Oracle (ORCL):** Database systems so deeply embedded in corporate workflows that replacing them carries enormous cost and operational risk .

**CrowdStrike (CRWD):** Cybersecurity infrastructure that becomes more critical, not less, as AI tools multiply the attack surface .

**Palo Alto Networks (PANW):** Network security with deep regulatory entrenchment across financial services, healthcare, and government .

**Cloudflare (NET):** Internet infrastructure handling an increasing share of global AI-driven traffic .

### Software Losers

**Salesforce (CRM):** Core workflow automation that AI agents are beginning to replicate internally without a paid subscription .

**Accenture (ACN):** Consulting and outsourcing services that AI agents are absorbing at a pace threatening the traditional billing model .

**DocuSign (DOCU):** Document management workflows that generative AI now handles from drafting through signature .

**Monday.com (MNDY):** Project coordination tools facing direct pressure from autonomous AI assistants .

**Duolingo (DUOL):** Language learning platform competing directly against AI tutors .

---

## What This Means for Investors

### If You're a Growth Investor

The days of buying any tech stock and expecting it to go up are over. The market is drawing hard lines between winners and losers. Memory stocks like SanDisk and Western Digital are showing what real AI demand looks like.

### If You're a Value Investor

Goldman's HALO framework gives you a way to think about durable businesses. Utilities, pipelines, industrial infrastructure—these aren't exciting, but they're not getting disrupted by AI either.

### If You're an ETF Investor

Be careful with broad tech ETFs. The Nasdaq 100 includes both AI winners and software losers. You might be getting more disruption risk than you bargained for. Sector-specific ETFs focused on semiconductors or infrastructure might make more sense.

### If You're Just Watching

This is a fascinating moment in market history. We're watching a technology-driven rotation that will define winners and losers for years to come. The companies selling picks and shovels to the AI revolution are winning. The companies selling software that AI might replace are losing.

It's that simple. And that complicated.

---

## Frequently Asked Questions

**Q: Why did Trump ban Anthropic from government use?**

A: Anthropic refused to drop safeguards against mass surveillance and autonomous weapons. The Pentagon demanded "any lawful use" of its technology. Anthropic held firm. Trump responded with a government-wide ban and a "supply chain risk" designation .

**Q: How did software stocks react to all this?**

A: Poorly. Software stocks were already under pressure from AI disruption fears. The Anthropic news added to the selling. Goldman's software basket is down 19% year-to-date .

**Q: What are the S&P 500's hottest stocks right now?**

A: SanDisk (SNDK) up 160%, Western Digital (WDC) up nearly 70%, and Teradyne (TER) up 60%. All three benefit from AI-driven demand for memory and chip testing .

**Q: What's the "HALO effect" Goldman talks about?**

A: Heavy assets, low obsolescence. Companies with physical infrastructure—factories, pipelines, utilities—are winning because their assets are hard to replicate and not easily disrupted by AI .

**Q: Are any software companies safe?**

A: Yes. Microsoft, Oracle, and cybersecurity firms like CrowdStrike have deep moats. But software companies that rely on selling seats to humans (like Salesforce) are vulnerable .

**Q: How does this affect Nvidia?**

A: Nvidia is in a complicated spot. They're selling the chips that power AI, which is great. But they're also facing concerns about "over-earning" and whether demand can sustain current valuations . The stock is down despite strong earnings .

**Q: What about the tariff situation?**

A: The Supreme Court struck down Trump's tariff authority, but he's threatening new tariffs anyway. This uncertainty is adding to market volatility .

**Q: Is this a good time to buy software stocks?**

A: That depends. Goldman says companies facing disruption fears will need either multiple quarters demonstrating business resilience or significantly lower valuations before investors re-engage in size .

**Q: What should I watch next?**

A: Keep an eye on hyperscaler capex numbers. If spending slows, even the hardware winners could face pressure. Goldman expects a peak in spending growth later this year .

---

## The Bottom Line

Here's what I keep coming back to.

The market is drawing a line. On one side are the companies selling physical infrastructure to the AI revolution—memory chips, testing equipment, factories, pipelines. On the other side are the companies selling software that AI might replace.

**The numbers don't lie:** SanDisk up 160%. Goldman's software basket down 19%. The market has made its preference clear.

**The Anthropic news** adds another layer of complexity. The administration is picking winners and losers in AI, and that creates both risk and opportunity.

**For investors,** the path forward requires nuance. Broad tech ETFs might not be the answer. Sector-specific plays, careful stock selection, and an understanding of Goldman's HALO framework will matter more than ever.

**For the rest of us,** we're watching a historic rotation play out in real time. The companies that make the stuff AI needs are winning. The companies that sell the stuff AI might replace are losing.

It's not complicated. But navigating it requires discipline.

---

*Got questions about how this affects your portfolio? Drop them in the comments.*

The Deal That Divided Silicon Valley: OpenAI Signs with Pentagon Hours After Trump Blacklists Anthropic

 

# The Deal That Divided Silicon Valley: OpenAI Signs with Pentagon Hours After Trump Blacklists Anthropic

**Published: February 28, 2026**

You know how sometimes you watch a drama unfold where two characters start from the same place, take opposite paths, and end up on completely different sides of history?

That's what's happening right now with OpenAI and Anthropic.

Just hours after President Trump ordered all federal agencies to immediately cease using Anthropic's technology, branding the AI company a national security risk, OpenAI CEO Sam Altman announced a deal with the Pentagon to deploy OpenAI's models inside classified military networks .

The timing couldn't be more dramatic. The same ethical guardrails that got Anthropic blacklisted—demands that its AI not be used for mass surveillance or fully autonomous weapons—are reportedly baked into OpenAI's agreement . The Pentagon apparently said yes to OpenAI where it said no to Anthropic.

Let me walk you through what actually happened, why it matters, and what this means for the future of AI, national security, and the growing divide between two of the world's most important technology companies.

---

## The Short Version: What You Need to Know

**The OpenAI deal:** OpenAI reached an agreement with the Department of War (the Pentagon's new name under the Trump administration) to deploy its AI models within classified military networks .

**The safety principles:** Altman emphasized that the agreement includes two core safeguards—"prohibitions on domestic mass surveillance and human responsibility for the use of force, including for autonomous weapon systems" .

**The Anthropic blacklisting:** Hours earlier, President Trump ordered all federal agencies to stop using Anthropic's technology and directed the Pentagon to designate the company a "supply chain risk"—a label typically reserved for companies from adversary nations .

**The conflict:** Anthropic had refused to agree to "any lawful use" of its Claude models, insisting on maintaining safeguards against mass surveillance and fully autonomous weapons. The Pentagon called this unacceptable .

**The irony:** OpenAI appears to have secured the same restrictions Anthropic was punished for demanding .

**What's next:** Anthropic vows to challenge the designation in court, while employees from both companies have shown solidarity, urging their leaders to stand together .

---

## The Ultimatum: Anthropic's Last Stand

To understand what happened Friday, you need to go back to the days leading up to it.

The Pentagon had given Anthropic a deadline: agree to "any lawful use" of its Claude models, dropping specific safeguards against mass surveillance and autonomous weapons, or face consequences .

Anthropic's CEO Dario Amodei refused to budge. In a statement, the company made its position clear: "No amount of intimidation or punishment from the Department of War will change our position on mass domestic surveillance or fully autonomous weapons" .

The company laid out its concerns explicitly. They would not support uses of AI that threaten democratic values. They would not allow their technology to power mass surveillance of American citizens. They would not enable weapons systems that could kill without human oversight .

This wasn't a new position. Anthropic had built its entire brand around being the "safety-first" AI company, the one founded by former OpenAI employees who left because they worried about the rush to commercialization .

But the stakes got real very quickly.

---

## The Hammer Falls: Trump's Truth Social Directive

On Friday, President Trump took to his Truth Social platform with a message that left no room for ambiguity:

"I am directing EVERY Federal Agency in the United States Government to IMMEDIATELY CEASE all use of Anthropic's technology. We don't need it, we don't want it and will not do business with them again! Anthropic better get their act together and be helpful during this phase out period, or I will use the Full Power of the Presidency to make them comply, with major civil and criminal consequences to follow" .

Defense Secretary Pete Hegseth followed up with an even more blistering attack. In a post on X, he accused Anthropic of "arrogance and betrayal" and a "textbook case of how not to do business with the United States Government" .

He announced that the Pentagon would designate Anthropic a "Supply-Chain Risk to National Security"—a label typically applied to companies with direct ties to foreign adversaries, never before used against an American firm .

The practical effect is devastating: "Effective immediately, no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic" .

Given that Anthropic's Claude is already used by eight of the ten largest U.S. companies, this could cause massive disruption across the defense industrial base .

---

## The Deal: OpenAI Steps In

Hours later, Sam Altman posted on X:

"Tonight, we reached an agreement with the Department of War to deploy our models in their classified network. In all of our interactions, the DoW displayed a deep respect for safety and a desire to partner to achieve the best possible outcome" .

The key paragraph came next:

"Two of our most important safety principles are prohibitions on domestic mass surveillance and human responsibility for the use of force, including for autonomous weapon systems. The DoW agrees with these principles, reflects them in law and policy, and we put them into our agreement" .

Altman added that OpenAI would "build technical safeguards to ensure our models behave as they should" and would deploy forward-deployed engineers (FDEs) to help with safety .

Then came an appeal for fairness: "We are asking the DoW to offer these same terms to all AI companies, which in our opinion we think everyone should be willing to accept. We have expressed our strong desire to see things de-escalate away from legal and governmental actions and towards reasonable agreements" .

Defense Secretary Hegseth reposted Altman's announcement. Under Secretary Emil Michael, in charge of technology at the Pentagon, added: "When it comes to matters of life and death for our warfighters, having a reliable and steady partner that engages in good faith makes all the difference as we enter into the AI Age" .

---

## The Irony: Same Restrictions, Different Outcome

Here's the part that's causing whiplash in Silicon Valley.

Anthropic's position—no mass surveillance, no fully autonomous weapons—is reportedly the same set of restrictions OpenAI just secured in its agreement .

So why was Anthropic blacklisted and OpenAI embraced?

The Pentagon's official position has been that it operates within the law and that contracted suppliers cannot set terms on how their products are employed . Defense Secretary Hegseth made this explicit: "The Department of War must have full, unrestricted access to Anthropic's models for every LAWFUL purpose in defense of the Republic" .

But if that's true, how did OpenAI get an agreement that includes those very restrictions?

Either the Pentagon softened its stance, or OpenAI found a way to frame the restrictions that was acceptable. Altman emphasized that the Department of War "agrees with these principles" and "reflects them in law and policy" . That framing—that these aren't new restrictions, just affirmations of existing law—may have been the key.

Whatever the reason, the optics are stark. One company stood firm and got crushed. Another found a path forward and got the deal.

---

## The Solidarity Movement: "We Will Not Be Divided"

Perhaps the most surprising development came from within the AI industry itself.

Hundreds of employees from Google DeepMind and OpenAI signed an open letter titled "We Will Not Be Divided," urging their companies to rally behind Anthropic .

"We hope our leaders will put aside their differences, and stand together to continue to refuse the Department of War's current demands for permission to use our models for domestic mass surveillance and autonomously killing people without human oversight," the letter said .

"They're trying to divide each company with fear that the other will give in. That strategy only works if none of us know where the others stand" .

This is remarkable. Employees of OpenAI, whose company just signed a deal with the Pentagon, are publicly calling for solidarity with the competitor that got blacklisted.

Top House Democrat Hakeem Jeffries praised Anthropic's "courage" for pushing back "against this shocking invasion of privacy scheme," calling Hegseth "the least qualified Secretary of Defense in our nation's history" .

---

## The Legal Fight: Anthropic's Challenge

Anthropic isn't going quietly. The company announced it will challenge the "supply chain risk" designation in court .

"We believe this designation would both be legally unsound and set a dangerous precedent for any American company that negotiates with the government," the company said .

The stakes are enormous. If the designation stands, any company doing business with the Pentagon would have to certify they don't use Anthropic's products. Given Claude's widespread adoption in enterprise, that could force a massive, expensive transition .

Anthropic's statement was defiant: "No amount of intimidation or punishment from the Department of War will change our position on mass domestic surveillance or fully autonomous weapons" .

---

## The Bigger Picture: AI's National Security Crossroads

This showdown marks a pivotal moment for the AI industry.

### The Safety Philosophy Shift

Both OpenAI and Anthropic have quietly softened their safety stances in recent weeks. Anthropic's updated "Responsible Scaling Policy 3.0" removed a hard commitment to pause training if models hit dangerous capability thresholds . The company acknowledged that unilateral safety pledges "won't survive a world where rivals have no such constraints" .

OpenAI, for its part, removed the word "safely" from its mission statement in late 2025—a small edit with potentially large implications .

But there's a difference between softening safety commitments and accepting military contracts. This week, that line got crossed.

### The Market Reaction

Anthropic's influence extends far beyond Washington. On Wall Street, new Claude releases have triggered what traders call the "SaaSpocalypse"—five separate stock market gyrations in four weeks .

Feb. 3: Legal plugins wiped out $285 billion in market value. Thomson Reuters plunged nearly 16%. LegalZoom cratered 20%.

Feb. 6: Claude Opus 4.6 launched, sending financial data stocks tumbling again.

Feb. 20: Claude Code Security hit cybersecurity stocks. CrowdStrike down 8%. Cloudflare down 8%.

The point is: Anthropic matters. Its technology is embedded in the largest U.S. companies. Disrupting that relationship has consequences far beyond one startup's fortunes .

### The Growth Trajectories

The financial stakes are enormous. OpenAI just closed a $110 billion funding round at a $730 billion pre-money valuation . Anthropic, just two weeks earlier, raised $30 billion at a $380 billion valuation .

But the growth curves tell different stories. Epoch AI's modeling suggests Anthropic has been growing at about 10x annually since crossing $1 billion ARR, while OpenAI is growing at about 3.4x. If current trends hold, Anthropic's ARR could surpass OpenAI's by August 2026 .

That's what makes this Pentagon showdown so significant. The government is picking sides in a commercial rivalry with billions—and potentially trillions—at stake.

---

## Table: OpenAI vs. Anthropic – The Pentagon Showdown

| **Factor** | **OpenAI** | **Anthropic** |

| :--- | :--- | :--- |

| **Pentagon Status** | Deal signed for classified network use  | Blacklisted, designated "supply chain risk"  |

| **Stated Restrictions** | No domestic mass surveillance, human responsibility for force  | Same restrictions demanded, refused to back down  |

| **CEO** | Sam Altman | Dario Amodei |

| **Recent Valuation** | ~$840 billion post-money | ~$380 billion post-money  |

| **Annual Growth Rate** | ~3.4x | ~10x  |

| **Key Enterprise Users** | Broad consumer base | 8 of 10 largest U.S. companies  |

| **Safety Framework** | Mission statement softened, removed "safety"  | RSP 3.0 removed "pause training" commitment  |

| **Response to Pentagon** | Negotiated deal with safeguards | Refused to compromise, now suing  |

---

## What This Means for Different People

### If You Work in AI

Your industry just got a lot more complicated. The clean lines between "ethical AI" and "military AI" just blurred. If you're at Anthropic, you're watching your company fight for its existence. If you're at OpenAI, you're watching your employer get rewarded for finding a path forward.

The employee letter—signed by hundreds from both companies—suggests the rank and file aren't happy with this divide.

### If You Care About AI Safety

This is the moment many safety advocates feared. The most safety-conscious company got punished. The company that found a way to work with the military got rewarded. The message to the industry is clear: adapt or die.

But it's not that simple. OpenAI's agreement includes restrictions. The Pentagon apparently accepted them. So maybe the message is: be flexible, not rigid.

### If You're an Investor

You're watching a $380 billion company get potentially locked out of a massive market. The "supply chain risk" designation could ripple through the entire defense industrial base. If you have exposure to companies that rely on Claude, pay attention.

The growth curves suggest Anthropic has enormous momentum. But momentum doesn't matter if you can't sell to your biggest customer.

### If You're Just Watching

You're witnessing history. The AI industry, which has operated largely outside government control, just got pulled directly into the national security apparatus. The lines between Silicon Valley and the Pentagon just got a lot blurrier.

---

## Frequently Asked Questions

**Q: What exactly happened between the Pentagon and Anthropic?**

A: The Pentagon demanded that Anthropic agree to "any lawful use" of its Claude models, dropping specific safeguards against mass surveillance and fully autonomous weapons. Anthropic refused. In response, President Trump ordered all federal agencies to stop using Anthropic, and the Pentagon designated the company a "supply chain risk" .

**Q: What did OpenAI agree to with the Pentagon?**

A: OpenAI reached a deal to deploy its models within the Pentagon's classified network. The agreement includes two core safeguards: prohibitions on domestic mass surveillance and human responsibility for the use of force, including for autonomous weapon systems .

**Q: Are OpenAI's safeguards different from what Anthropic demanded?**

A: They appear to be the same. Anthropic's position was also against mass surveillance and fully autonomous weapons. The key difference seems to be that OpenAI found a way to have those restrictions accepted, while Anthropic's refusal led to a confrontation .

**Q: Why did the Pentagon accept OpenAI's restrictions but punish Anthropic?**

A: That's the million-dollar question. Altman emphasized that the Department of War "agrees with these principles" and "reflects them in law and policy" . It's possible the framing—that these aren't new restrictions but affirmations of existing law—made the difference. It's also possible the Pentagon simply preferred dealing with OpenAI.

**Q: What happens to Anthropic now?**

A: Anthropic will challenge the "supply chain risk" designation in court. If the designation stands, any company doing business with the Pentagon would have to certify they don't use Anthropic's products—a potentially massive disruption .

**Q: What did Trump say about Anthropic?**

A: On Truth Social, Trump wrote: "I am directing EVERY Federal Agency in the United States Government to IMMEDIATELY CEASE all use of Anthropic's technology. We don't need it, we don't want it and will not do business with them again!" .

**Q: Did employees protest this decision?**

A: Yes. Hundreds of employees from Google DeepMind and OpenAI signed an open letter titled "We Will Not Be Divided," urging their leaders to stand together and refuse the Pentagon's demands .

**Q: Is OpenAI now a military contractor?**

A: In a sense, yes. The deal allows the Pentagon to use OpenAI's models in classified networks. But Altman emphasized that the agreement includes safety safeguards and that the Pentagon agreed to those terms .

**Q: What does this mean for AI safety more broadly?**

A: This is a watershed moment. The company that positioned itself as the safety leader got punished. The company that found a way to work with the military got rewarded. The message to the industry is that safety principles must be flexible enough to accommodate national security priorities.

**Q: Could this affect OpenAI's relationship with Microsoft?**

A: OpenAI and Microsoft issued a joint statement this week affirming their partnership remains strong. But this Pentagon deal, combined with OpenAI's recent $110 billion funding round that included Amazon and Nvidia, suggests OpenAI is diversifying its relationships.

---

## The Bottom Line

Here's what I keep coming back to.

Two companies started from nearly the same place. Both were founded by people who believed AI needed careful guardrails. Both built safety into their core missions. Both faced the same choice: work with the military, on its terms, or refuse.

One refused and got crushed. One found a path forward and got the deal.

**The irony** is that OpenAI's deal reportedly includes the same restrictions Anthropic was punished for demanding. The Pentagon apparently said yes to OpenAI where it said no to Anthropic. Whether that's because of different framing, different personalities, or different political calculations, the result is the same.

**The industry** is watching. The employee letter—signed by hundreds from both camps—shows the rank and file aren't happy. They see their companies being divided and conquered. They're urging solidarity.

**The government** just made a powerful statement. It will work with AI companies, but on its terms. Companies that insist on setting terms will be left behind.

**The question** for everyone else is simple: What kind of AI future do we want? One where the most safety-conscious companies get locked out of government work? One where the lines between commercial AI and military AI blur completely?

There are no easy answers. But this week, the questions got a lot more urgent.

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*Got thoughts on the OpenAI-Pentagon deal? Worried about where this is heading? Drop a comment and let me know.*