A US Special Operations Command analyst nearly triggered a military conflict after generating a fraudulent intelligence report using an AI chatbot. The erroneous document falsely claimed that a Chinese vessel was transporting nuclear arms program components through the Middle East. The incident occurred when the analyst utilized a chatbot to analyze a ship's manifest by fusing open-source intelligence with classified signals intelligence from government holdings. This process led the AI to hallucinate, inaccurately identifying the nature of the cargo. Consequently, the US military prepared to intercept and board the vessel with air support before officials identified the factual error within the AI-generated report. This near-miss highlights significant risks associated with Large Language Models (LLMs) and their tendency to fabricate information when training data lacks sufficient context. The incident follows the Department of Defense's "AI acceleration strategy," which aims to make data across federated IT systems and mission systems available for AI exploitation. This event serves as a critical example of how AI hallucinations in professional intelligence analysis can lead to high-stakes geopolitical instability and the potential for kinetic military engagement.