As predicted, Anthropic has the obviously superior legal argument and Judge Lin has granted a preliminary injunction shutting down (for now) the Government's actions agains the company.
Here's an excellent and detailed overview from Zvi Mowshowitz. Quoting Zvi, who's quoting the judge:
At bottom, Anthropic has shown that these broad punitive measures were likely unlawful and that it is suffering irreparable harm from them. Numerous amici have also described wideranging harm to the public interest, including the chilling of open discussion about important topics in AI safety. The motion for a preliminary injunction is granted.
It's not going to get better for the Department of Defense, but they are stubborn so it's likely to make them look worse as the case progresses.