At the Anduril Industries testing site in southern California, engineers are hard at work experimenting with a custom-built drone called the Ghost that can weigh up to 55 pounds and reach speeds of 85 miles per hour.

Anduril also makes the Anvil, a quadcopter that can fly 100 miles an hour and was recently purchased by the U.S. military to be tested by special forces soldiers. Company executives refer to the unmanned vehicles as "smart eyes in the sky," and they're finding a market among government agencies.

Founded in 2017 by Oculus creator Palmer Luckey, Anduril has signed contracts with the U.S. Department of Defense, the Department of Homeland Security and the U.K. Royal Marines. Luckey is going directly after entrenched contractors like Raytheon, Northrop Grumman, Lockheed Martin, Boeing and General Dynamics, which he describes as old and slow. Anduril's focus is cutting-edge defense systems with a focus on modern technologies like artificial intelligence.

There's plenty of business available. The top 100 global defense companies generated defense-related revenue of $490 billion in fiscal 2018, according to Defense News.

"Lockheed, Raytheon, and the traditional defense companies are good at building some things," Luckey told CNBC in an interview. "They are good at building aircraft carriers. They are good at building fighter interceptors. But they do not have the world's best talent when it comes to artificial intelligence, computer vision and machine learning. That is why our company focuses on that. We think we can add a lot of value there that other people cannot necessarily add."

Matt Grimm, Anduril's chief operating officer, says other key advantages are that the products are cost-effective and the company emphasizes "speed to market." Anduril recently reeled in $120 million at a valuation of close to $1 billion from Founders Fund, General Catalyst, 8VC and Andreessen Horowitz.