A materialist explanation for why the US has an inferior military, despite being more expensive, is that the US military is driven by profit for the capitalist class. The excess cost is stolen by the capitalists.

Here is a section of the letter which is more about historical materialism. It talks about how the US extracts resources from underdeveloped countries, which leads people from those countries to migrate to the US, and then the US uses violence against those migrants.

The ignorance of American leaders leads to a cascade of problems—a vicious cycle creating a whirlpool of catastrophe. They spend billions of dollars interfering in and destabilizing independent countries—countries that wish to preserve their self-autonomy and national values—to plunder their natural resources. As a result, a flood of homeless people from those countries pours into the United States. Then they spend billions more to control illegal immigration and return immigrants to their countries. The plundered riches end up in the pockets of the elite, while all the costs of this vicious cycle are borne by the American taxpayers.

Driven by the ambition to dominate the world economy, they put in place policies to facilitate economic globalization without considering the long-term consequences. They sing the praises of free trade and rant against the evils of tariffs. Then, after two decades, when they realize that the United States has lost great swathes of its manufacturing landscape to developing countries, they once again shift gears abruptly and—again without considering the long-term consequences—go into knee-jerk-reaction mode and start indiscriminately smacking tariffs on all sorts of countries, making matters even worse. And it’s the American people who are left holding the bag.

The same ignorance is evident in how the U.S. pulled out of its international environmental commitments to allow the government more leeway to pursue growth in the hope that it could boost its manufacturing sector. Then, when they have to deal with the costs of mitigating the consequences of pollution, they again lay all the economic burden at the feet of the American taxpayers. The rich keep getting richer, and the poor poorer. It’s the American taxpayers that always pay the price of their leaders’ incompetence. The leaders themselves are never held accountable.

While they certainly believe that God wanted them to win and arranged that they would, I believe that "superior material capabilities" here refers to military infrastructure, weaponry, etc. and they are correct that there are many other factors to the outcome of a war that are compatible with historical materialism and, minimally, part of what is being referred to.

Take for example the social circumstances of the Iranian people being broadly united in an existential struggle against an invader while domestically in the US the war is unpopular and morale is so shit that there are widespread stories of sabotage not on "real" political identical grounds but just because people rightly see the war as them risking their health and lives over literally nothing except maybe a promotion. These are critical to a Marxist account and I don't believe they fit entirely in "material capabilities" in the sense being used here (even if, taking the words in the phrase literally, you could call them that).

Well does the US' continent sized country with x5 Iran's population, and control over the global financial system mean it is going to win this war?

No. Because in addition to materialism, there is dialectics.

hegel sitting happily upright in tehran

No, but we can appreciate the idea that God has done several divine interventions on behalf of jews but apparently decided Israel wasn't worthy and caused them to lose.

I mean it was a religious revolution not a socialist one.