Defense Stocks Surge in 2026 Amid Geopolitical Tensions
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: Fool
- Surge in Defense Spending: Global defense spending is projected to reach $2.6 trillion in 2026, reflecting an 8.1% increase from 2025, driven by heightened geopolitical uncertainties prompting nations to boost military budgets, thereby fostering overall growth in the defense sector.
- Strong Performance by Major Firms: Lockheed Martin, Northrop Grumman, and Huntington Ingalls Industries have all seen their stock prices rise over 20% in early 2026, with Lockheed Martin leading at a 26% increase, indicating strong market confidence and investment enthusiasm in the defense industry.
- Increased NATO Spending Goals: Under pressure from the Trump administration, NATO's defense spending target has been raised from 2% to 5% of GDP by 2035, prompting major economies like Germany to significantly ramp up defense investments, with Germany expected to meet this target by 2030, further driving growth in the global defense market.
- Surge in U.S. Arms Sales: The Trump administration recently approved massive arms sales to Israel and Saudi Arabia, totaling $6.67 billion and $9 billion respectively, primarily benefiting U.S. defense firms, highlighting that in an increasingly dangerous global security environment, the defense industry will continue to thrive from government spending and investments.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy LMT?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on LMT
Wall Street analysts forecast LMT stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for LMT is 535.50 USD with a low forecast of 430.00 USD and a high forecast of 605.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
12 Analyst Rating
4 Buy
7 Hold
1 Sell
Hold
Current: 609.180
Low
430.00
Averages
535.50
High
605.00
Current: 609.180
Low
430.00
Averages
535.50
High
605.00
About LMT
Lockheed Martin Corporation is a global aerospace and defense company. The Company is engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. Its segments include Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft. MFC segment provides air and missile defense systems, manned and unmanned ground vehicles, energy management solutions, and others. RMS segment designs, manufactures, services and supports various military and commercial helicopters, surface ships, sea and land-based missile defense systems, and others. Its Space segment is engaged in the research and design, development, engineering and production of satellites, space transportation systems, and strategic, advanced strike, and defensive systems.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Lockheed Martin Reports Strong Performance and Growth Outlook
- Significant Performance Growth: Lockheed Martin's sales reached $75 billion in 2025, reflecting a 6% year-over-year increase with contributions from all business segments, showcasing the company's strong market position in defense.
- Record Backlog: The company reported a backlog of $194 billion for 2025, a 17% increase year-over-year, representing 2.5 times its annual sales, providing revenue certainty for multiple years and indicating robust market demand.
- Strategic Contracts Boost Production: Landmark agreements with the U.S. Department of Defense have quadrupled THAAD interceptor production from 96 to 400 units annually, while PAC-3 missile production will triple to 2,000 units, significantly enhancing production capacity.
- Optimistic Future Outlook: Sales guidance for 2026 is projected between $77.5 billion and $80 billion, with management anticipating over 25% year-over-year growth in operating profit, indicating sustained strong demand for combat-proven systems like the F-35 and HIMARS.
See More
Lockheed Martin Secures $249M Contract for Electronic Warfare System
- Significant Contract Value: Lockheed Martin has been awarded a $249 million contract that encompasses spares, repairs, and engineering services for the Surface Electronic Warfare Improvement Program, indicating robust demand in the defense sector.
- Project Timeline: The work will be conducted in Liverpool, New York, and is expected to be completed by February 2031, highlighting the company's ongoing commitment and strategic planning in long-term defense projects.
- Diverse Contract Nature: This contract is a cost-plus-fixed-fee and firm-fixed-price IDIQ contract, reflecting Lockheed Martin's flexibility and adaptability in managing complex defense projects, thereby enhancing its competitive edge in the market.
- Contracting Activity Context: The contract is awarded by the Naval Surface Warfare Center Crane in Indiana, further solidifying Lockheed Martin's collaboration with the U.S. Navy and suggesting potential for more cooperative opportunities in the future.
See More
Defense Stocks Surge in 2026 Amid Geopolitical Tensions
- Surge in Defense Spending: Global defense spending is projected to reach $2.6 trillion in 2026, reflecting an 8.1% increase from 2025, driven by heightened geopolitical uncertainties prompting nations to boost military budgets, thereby fostering overall growth in the defense sector.
- Strong Performance by Major Firms: Lockheed Martin, Northrop Grumman, and Huntington Ingalls Industries have all seen their stock prices rise over 20% in early 2026, with Lockheed Martin leading at a 26% increase, indicating strong market confidence and investment enthusiasm in the defense industry.
- Increased NATO Spending Goals: Under pressure from the Trump administration, NATO's defense spending target has been raised from 2% to 5% of GDP by 2035, prompting major economies like Germany to significantly ramp up defense investments, with Germany expected to meet this target by 2030, further driving growth in the global defense market.
- Surge in U.S. Arms Sales: The Trump administration recently approved massive arms sales to Israel and Saudi Arabia, totaling $6.67 billion and $9 billion respectively, primarily benefiting U.S. defense firms, highlighting that in an increasingly dangerous global security environment, the defense industry will continue to thrive from government spending and investments.
See More
Japan Election Preview: High Probability of Policy Continuity
- Election Outlook: Japan is heading to the polls on February 8, with markets pricing in a 99% chance that Prime Minister Sanae Takaichi will remain in power, indicating strong expectations for policy continuity.
- Policy Impact Expectations: The market anticipates that Takaichi will continue aggressive fiscal stimulus and adopt a slower approach to interest rate hikes from the Bank of Japan, which will support economic growth and bolster market confidence.
- Yen Performance Analysis: Ahead of the election, the yen has been trading heavily, with USD/JPY hovering near the 157 level, reflecting market uncertainty about future policies and strong confidence in Takaichi's re-election.
- Governing Party Dynamics: The market shows a 99% support rate for the ruling Liberal Democratic Party (LDP) while the Japan Innovation Party (JIP) stands at only 22%, suggesting that the LDP may govern without its coalition partner, providing Takaichi with a “clear runway” to implement more hawkish policies.
See More
Surge in U.S. Layoffs Alters Investment Strategies
- Surge in Layoffs: January saw over 108,000 layoffs in the U.S., marking the worst start to the year since 2009, with hiring plans plummeting to record lows, indicating heightened economic uncertainty according to Challenger, Gray & Christmas.
- Focus on Wealth Preservation: Post-layoff, wealth creation takes a backseat to wealth preservation strategies, as financial planners recommend maintaining a substantial emergency fund to cover essential expenses like rent and insurance, thereby mitigating risks during market volatility.
- Income-Focused ETFs Gain Traction: With salary income halted, investors are turning to ETFs designed for cash flow, such as iShares Core U.S. Aggregate Bond ETF and Vanguard Total Bond Market ETF, which can modestly supplement cash reserves during unemployment, although they are not substitutes for regular paychecks.
- Gradual Investment Approach: Investing severance packages all at once exposes individuals to market timing risks; thus, gradual allocation strategies are advised to smooth entry points, especially when job searches extend longer than anticipated, ensuring liquidity amid economic uncertainty.
See More
Oil Prices Surge as U.S.-Iran Tensions Escalate
- Market Reaction: Oil prices surged with WTI crude rising 1.1% to $64.70 and Brent crude climbing to $69 immediately after news of stalled talks, indicating heightened market sensitivity to geopolitical risks.
- Military Conflict Risk: Following U.S. confirmation of engagement between the USS Abraham Lincoln carrier strike group and Iranian forces, the odds of a U.S. military strike on Iran by the end of the month spiked to 35%, reflecting investor concerns over escalating tensions.
- Diplomatic Uncertainty: Despite ongoing talks in Turkey, Iran's demand to limit discussions to nuclear capabilities has led Secretary of State Rubio to insist on including missile programs and human rights issues, increasing the risk of negotiations breaking down.
- Shifting Market Expectations: Should the State Department announce the cancellation of the Middle East envoy's trip to Istanbul within the next 24 hours, the market will likely treat diplomatic efforts as nearly dead, potentially driving further volatility in oil prices and defense stocks like Lockheed Martin.
See More
Lockheed Martin Reports Strong Performance and Growth Outlook
- Significant Performance Growth: Lockheed Martin's sales reached $75 billion in 2025, reflecting a 6% year-over-year increase with contributions from all business segments, showcasing the company's strong market position in defense.
- Record Backlog: The company reported a backlog of $194 billion for 2025, a 17% increase year-over-year, representing 2.5 times its annual sales, providing revenue certainty for multiple years and indicating robust market demand.
- Strategic Contracts Boost Production: Landmark agreements with the U.S. Department of Defense have quadrupled THAAD interceptor production from 96 to 400 units annually, while PAC-3 missile production will triple to 2,000 units, significantly enhancing production capacity.
- Optimistic Future Outlook: Sales guidance for 2026 is projected between $77.5 billion and $80 billion, with management anticipating over 25% year-over-year growth in operating profit, indicating sustained strong demand for combat-proven systems like the F-35 and HIMARS.
See More
Lockheed Martin Secures $249M Contract for Electronic Warfare System
- Significant Contract Value: Lockheed Martin has been awarded a $249 million contract that encompasses spares, repairs, and engineering services for the Surface Electronic Warfare Improvement Program, indicating robust demand in the defense sector.
- Project Timeline: The work will be conducted in Liverpool, New York, and is expected to be completed by February 2031, highlighting the company's ongoing commitment and strategic planning in long-term defense projects.
- Diverse Contract Nature: This contract is a cost-plus-fixed-fee and firm-fixed-price IDIQ contract, reflecting Lockheed Martin's flexibility and adaptability in managing complex defense projects, thereby enhancing its competitive edge in the market.
- Contracting Activity Context: The contract is awarded by the Naval Surface Warfare Center Crane in Indiana, further solidifying Lockheed Martin's collaboration with the U.S. Navy and suggesting potential for more cooperative opportunities in the future.
See More
Defense Stocks Surge in 2026 Amid Geopolitical Tensions
- Surge in Defense Spending: Global defense spending is projected to reach $2.6 trillion in 2026, reflecting an 8.1% increase from 2025, driven by heightened geopolitical uncertainties prompting nations to boost military budgets, thereby fostering overall growth in the defense sector.
- Strong Performance by Major Firms: Lockheed Martin, Northrop Grumman, and Huntington Ingalls Industries have all seen their stock prices rise over 20% in early 2026, with Lockheed Martin leading at a 26% increase, indicating strong market confidence and investment enthusiasm in the defense industry.
- Increased NATO Spending Goals: Under pressure from the Trump administration, NATO's defense spending target has been raised from 2% to 5% of GDP by 2035, prompting major economies like Germany to significantly ramp up defense investments, with Germany expected to meet this target by 2030, further driving growth in the global defense market.
- Surge in U.S. Arms Sales: The Trump administration recently approved massive arms sales to Israel and Saudi Arabia, totaling $6.67 billion and $9 billion respectively, primarily benefiting U.S. defense firms, highlighting that in an increasingly dangerous global security environment, the defense industry will continue to thrive from government spending and investments.
See More
Japan Election Preview: High Probability of Policy Continuity
- Election Outlook: Japan is heading to the polls on February 8, with markets pricing in a 99% chance that Prime Minister Sanae Takaichi will remain in power, indicating strong expectations for policy continuity.
- Policy Impact Expectations: The market anticipates that Takaichi will continue aggressive fiscal stimulus and adopt a slower approach to interest rate hikes from the Bank of Japan, which will support economic growth and bolster market confidence.
- Yen Performance Analysis: Ahead of the election, the yen has been trading heavily, with USD/JPY hovering near the 157 level, reflecting market uncertainty about future policies and strong confidence in Takaichi's re-election.
- Governing Party Dynamics: The market shows a 99% support rate for the ruling Liberal Democratic Party (LDP) while the Japan Innovation Party (JIP) stands at only 22%, suggesting that the LDP may govern without its coalition partner, providing Takaichi with a “clear runway” to implement more hawkish policies.
See More
Surge in U.S. Layoffs Alters Investment Strategies
- Surge in Layoffs: January saw over 108,000 layoffs in the U.S., marking the worst start to the year since 2009, with hiring plans plummeting to record lows, indicating heightened economic uncertainty according to Challenger, Gray & Christmas.
- Focus on Wealth Preservation: Post-layoff, wealth creation takes a backseat to wealth preservation strategies, as financial planners recommend maintaining a substantial emergency fund to cover essential expenses like rent and insurance, thereby mitigating risks during market volatility.
- Income-Focused ETFs Gain Traction: With salary income halted, investors are turning to ETFs designed for cash flow, such as iShares Core U.S. Aggregate Bond ETF and Vanguard Total Bond Market ETF, which can modestly supplement cash reserves during unemployment, although they are not substitutes for regular paychecks.
- Gradual Investment Approach: Investing severance packages all at once exposes individuals to market timing risks; thus, gradual allocation strategies are advised to smooth entry points, especially when job searches extend longer than anticipated, ensuring liquidity amid economic uncertainty.
See More
Oil Prices Surge as U.S.-Iran Tensions Escalate
- Market Reaction: Oil prices surged with WTI crude rising 1.1% to $64.70 and Brent crude climbing to $69 immediately after news of stalled talks, indicating heightened market sensitivity to geopolitical risks.
- Military Conflict Risk: Following U.S. confirmation of engagement between the USS Abraham Lincoln carrier strike group and Iranian forces, the odds of a U.S. military strike on Iran by the end of the month spiked to 35%, reflecting investor concerns over escalating tensions.
- Diplomatic Uncertainty: Despite ongoing talks in Turkey, Iran's demand to limit discussions to nuclear capabilities has led Secretary of State Rubio to insist on including missile programs and human rights issues, increasing the risk of negotiations breaking down.
- Shifting Market Expectations: Should the State Department announce the cancellation of the Middle East envoy's trip to Istanbul within the next 24 hours, the market will likely treat diplomatic efforts as nearly dead, potentially driving further volatility in oil prices and defense stocks like Lockheed Martin.
See More
