Defense Stocks Surge in 2026 Amid Geopolitical Tensions
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 06 2026
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.
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Analyst Views on LMT
Wall Street analysts forecast LMT stock price to rise
12 Analyst Rating
4 Buy
7 Hold
1 Sell
Hold
Current: 517.970
Low
430.00
Averages
535.50
High
605.00
Current: 517.970
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.
Impact of Iran War on Defense Stocks
- Defense Industry Spotlight: The ongoing Iran war has drawn attention to the defense sector, with major companies like Lockheed Martin and Northrop Grumman earning billions annually through military contracts; however, despite increased trading volumes, stock prices have generally declined, with Lockheed Martin down 18% over the past three months.
- Increased Military Spending: The Pentagon reported that the war has cost approximately $25 billion, excluding repair costs for military bases, and more funding is expected to flow to defense contractors, particularly Lockheed Martin, which benefited from a $4.8 billion contract for Patriot missiles.
- Impact of Technological Change: As technology advances, companies like Palantir are becoming increasingly important to the Pentagon, with its AI software set to help optimize munitions use, and it is expected to receive a $2.3 billion contract, altering traditional military budget spending practices.
- Analysts' Cautious Outlook: Analysts from Morgan Stanley and UBS have expressed caution regarding defense stocks, lowering price targets for Lockheed Martin and Northrop Grumman; while there is long-term potential for these companies, short-term volatility is anticipated due to the current situation.
See More
US Plans $71 Billion Investment to Upgrade Nuclear Arsenal
- Massive Budget Commitment: The U.S. Department of Defense's fiscal year 2027 budget proposal includes a substantial $71 billion investment aimed at modernizing the nuclear triad, with $6.1 billion allocated for the B-21 stealth bomber and $4.6 billion for the Sentinel system to replace older missiles, underscoring the focus on nuclear deterrence capabilities.
- Submarine and Missile System Upgrades: The budget also earmarks $16.2 billion for the construction of Columbia-class submarines and $1.5 billion for the development of a new long-range cruise missile, aiming to fully replace outdated weaponry rather than making incremental upgrades, thereby enhancing sea-based nuclear defense.
- Beneficiaries Among Major Contractors: General Dynamics (GD), as the primary contractor for the Columbia-class submarines, is expected to reap the most benefits from the Navy's upgrade program, while BWX Technologies (BWXT) plays a crucial role by supplying the unique nuclear reactor technology essential for the sea-based nuclear force.
- Positive Stock Market Reaction: BWXT and Curtiss-Wright (CW) stocks have surged over 25% and 30% year-to-date, respectively, while GD's stock has gained 2%, reflecting market optimism regarding defense investments, despite RTX's stock declining by 4%.
See More
U.S. Demand for Hypersonic Test Platforms Surges
- Infrastructure Shortage: The U.S. Department of Defense's procurement patterns indicate that the development of hypersonic weapons and propulsion systems is outpacing the construction of necessary testing infrastructure, creating a pressing demand that Starfighters Space's F-104 aircraft can fulfill.
- Market Opportunity: Starfighters Space announced the immediate availability of its F-104 Starfighter as an aerodynamic test platform for the U.S. defense and aerospace community, filling a current gap in testing capacity and expected to attract more clients.
- Expanding Customer Base: Starfighters Space's clientele includes prominent companies such as Lockheed Martin, GE, and the U.S. Air Force Research Laboratory, with the company's operational footprint expanding to Midland International Air & Space Port in Texas, enhancing its market competitiveness.
- Technical Advantage: The F-104 platform can replicate the aerodynamic conditions of the first 30 seconds of a rocket launch, providing a testing environment that closely resembles actual flight, thereby improving the accuracy and reliability of tests by narrowing the gap between laboratory simulations and real-world conditions.
See More
U.S. Accelerates Development of Hypersonic Test Platforms
- Surging Hypersonic Demand: The U.S. Department of Defense's procurement patterns indicate that the development of hypersonic weapons and propulsion systems is outpacing the construction of necessary testing infrastructure, prompting Starfighters Space to swiftly respond by offering its F-104 aircraft as a testing platform.
- Infrastructure Lag: NASA's recent completion of its first new wind tunnel in over 40 years highlights the emphasis on wind tunnel construction in defense budgets, while Starfighters' F-104 platform can provide immediate testing capabilities to bridge this infrastructure gap.
- Solid Customer Base: Starfighters Space boasts a client list that includes major players like Lockheed Martin and the U.S. Air Force Research Laboratory, underscoring its strong market position in the defense and aerospace sectors, and it is expected to benefit from the upcoming demand for hypersonic testing.
- Operational Footprint Expansion: With operational bases established at Kennedy Space Center in Florida and Midland International Air & Space Port in Texas, Starfighters enhances its competitive edge in the hypersonic testing market, ensuring it can meet the growing customer demand.
See More
VisionWave Files Patent to Enhance AI Vision Technology
- Patent Application Overview: VisionWave Holdings filed a provisional patent application for its xCalibre™ visual intelligence platform on April 24, 2026, aiming to transform conventional camera streams into structured sensor intelligence, enhancing real-time operational capabilities in security and defense sectors.
- Market Potential Analysis: The military AI video surveillance market is projected to grow from approximately $655 million in 2024 to roughly $3 billion by 2030, indicating an increasing strategic demand for owning the architecture that processes data, which may impact follow-on procurement valuations.
- Technological Innovation Significance: xCalibre™ treats cameras as intelligent sensors capable of detection, classification, and event analysis, significantly reducing latency and improving edge deployment efficiency, thereby providing higher operational value in security and infrastructure monitoring.
- Intellectual Property Strategy: VisionWave believes this patent application may strengthen its intellectual property position in AI-driven computer vision and edge intelligence, supporting multiple use cases and enhancing its competitive advantage in a rapidly evolving market.
See More
VisionWave Files Patent to Enhance Competitive Edge in AI Vision
- Patent Application Overview: VisionWave Holdings filed a provisional patent application for its xCalibre™ visual intelligence platform on April 24, 2026, aiming to convert conventional camera streams into structured sensor intelligence, thereby enhancing data processing capabilities and gaining an edge in the competitive defense market.
- Market Potential Analysis: The military AI video surveillance market is projected to grow from approximately $655 million in 2024 to around $3 billion by 2030, indicating a rising strategic demand for advanced computer vision architectures, which further enhances the company's competitiveness in defense procurement.
- Technological Innovation Value: The xCalibre™ platform intelligently processes data from various camera types to enable real-time detection, classification, and event analysis, significantly reducing latency and improving edge deployment efficiency, thus creating higher commercial value in security and defense applications.
- Importance of IP Strategy: VisionWave believes that patent-protected architecture will provide a competitive advantage in AI-driven computer vision and edge intelligence, with the value of intellectual property increasing as the number of supported camera types and use cases grows, strengthening the company's position in the market.
See More
Impact of Iran War on Defense Stocks
- Defense Industry Spotlight: The ongoing Iran war has drawn attention to the defense sector, with major companies like Lockheed Martin and Northrop Grumman earning billions annually through military contracts; however, despite increased trading volumes, stock prices have generally declined, with Lockheed Martin down 18% over the past three months.
- Increased Military Spending: The Pentagon reported that the war has cost approximately $25 billion, excluding repair costs for military bases, and more funding is expected to flow to defense contractors, particularly Lockheed Martin, which benefited from a $4.8 billion contract for Patriot missiles.
- Impact of Technological Change: As technology advances, companies like Palantir are becoming increasingly important to the Pentagon, with its AI software set to help optimize munitions use, and it is expected to receive a $2.3 billion contract, altering traditional military budget spending practices.
- Analysts' Cautious Outlook: Analysts from Morgan Stanley and UBS have expressed caution regarding defense stocks, lowering price targets for Lockheed Martin and Northrop Grumman; while there is long-term potential for these companies, short-term volatility is anticipated due to the current situation.
See More
US Plans $71 Billion Investment to Upgrade Nuclear Arsenal
- Massive Budget Commitment: The U.S. Department of Defense's fiscal year 2027 budget proposal includes a substantial $71 billion investment aimed at modernizing the nuclear triad, with $6.1 billion allocated for the B-21 stealth bomber and $4.6 billion for the Sentinel system to replace older missiles, underscoring the focus on nuclear deterrence capabilities.
- Submarine and Missile System Upgrades: The budget also earmarks $16.2 billion for the construction of Columbia-class submarines and $1.5 billion for the development of a new long-range cruise missile, aiming to fully replace outdated weaponry rather than making incremental upgrades, thereby enhancing sea-based nuclear defense.
- Beneficiaries Among Major Contractors: General Dynamics (GD), as the primary contractor for the Columbia-class submarines, is expected to reap the most benefits from the Navy's upgrade program, while BWX Technologies (BWXT) plays a crucial role by supplying the unique nuclear reactor technology essential for the sea-based nuclear force.
- Positive Stock Market Reaction: BWXT and Curtiss-Wright (CW) stocks have surged over 25% and 30% year-to-date, respectively, while GD's stock has gained 2%, reflecting market optimism regarding defense investments, despite RTX's stock declining by 4%.
See More
U.S. Demand for Hypersonic Test Platforms Surges
- Infrastructure Shortage: The U.S. Department of Defense's procurement patterns indicate that the development of hypersonic weapons and propulsion systems is outpacing the construction of necessary testing infrastructure, creating a pressing demand that Starfighters Space's F-104 aircraft can fulfill.
- Market Opportunity: Starfighters Space announced the immediate availability of its F-104 Starfighter as an aerodynamic test platform for the U.S. defense and aerospace community, filling a current gap in testing capacity and expected to attract more clients.
- Expanding Customer Base: Starfighters Space's clientele includes prominent companies such as Lockheed Martin, GE, and the U.S. Air Force Research Laboratory, with the company's operational footprint expanding to Midland International Air & Space Port in Texas, enhancing its market competitiveness.
- Technical Advantage: The F-104 platform can replicate the aerodynamic conditions of the first 30 seconds of a rocket launch, providing a testing environment that closely resembles actual flight, thereby improving the accuracy and reliability of tests by narrowing the gap between laboratory simulations and real-world conditions.
See More
U.S. Accelerates Development of Hypersonic Test Platforms
- Surging Hypersonic Demand: The U.S. Department of Defense's procurement patterns indicate that the development of hypersonic weapons and propulsion systems is outpacing the construction of necessary testing infrastructure, prompting Starfighters Space to swiftly respond by offering its F-104 aircraft as a testing platform.
- Infrastructure Lag: NASA's recent completion of its first new wind tunnel in over 40 years highlights the emphasis on wind tunnel construction in defense budgets, while Starfighters' F-104 platform can provide immediate testing capabilities to bridge this infrastructure gap.
- Solid Customer Base: Starfighters Space boasts a client list that includes major players like Lockheed Martin and the U.S. Air Force Research Laboratory, underscoring its strong market position in the defense and aerospace sectors, and it is expected to benefit from the upcoming demand for hypersonic testing.
- Operational Footprint Expansion: With operational bases established at Kennedy Space Center in Florida and Midland International Air & Space Port in Texas, Starfighters enhances its competitive edge in the hypersonic testing market, ensuring it can meet the growing customer demand.
See More
VisionWave Files Patent to Enhance AI Vision Technology
- Patent Application Overview: VisionWave Holdings filed a provisional patent application for its xCalibre™ visual intelligence platform on April 24, 2026, aiming to transform conventional camera streams into structured sensor intelligence, enhancing real-time operational capabilities in security and defense sectors.
- Market Potential Analysis: The military AI video surveillance market is projected to grow from approximately $655 million in 2024 to roughly $3 billion by 2030, indicating an increasing strategic demand for owning the architecture that processes data, which may impact follow-on procurement valuations.
- Technological Innovation Significance: xCalibre™ treats cameras as intelligent sensors capable of detection, classification, and event analysis, significantly reducing latency and improving edge deployment efficiency, thereby providing higher operational value in security and infrastructure monitoring.
- Intellectual Property Strategy: VisionWave believes this patent application may strengthen its intellectual property position in AI-driven computer vision and edge intelligence, supporting multiple use cases and enhancing its competitive advantage in a rapidly evolving market.
See More
VisionWave Files Patent to Enhance Competitive Edge in AI Vision
- Patent Application Overview: VisionWave Holdings filed a provisional patent application for its xCalibre™ visual intelligence platform on April 24, 2026, aiming to convert conventional camera streams into structured sensor intelligence, thereby enhancing data processing capabilities and gaining an edge in the competitive defense market.
- Market Potential Analysis: The military AI video surveillance market is projected to grow from approximately $655 million in 2024 to around $3 billion by 2030, indicating a rising strategic demand for advanced computer vision architectures, which further enhances the company's competitiveness in defense procurement.
- Technological Innovation Value: The xCalibre™ platform intelligently processes data from various camera types to enable real-time detection, classification, and event analysis, significantly reducing latency and improving edge deployment efficiency, thus creating higher commercial value in security and defense applications.
- Importance of IP Strategy: VisionWave believes that patent-protected architecture will provide a competitive advantage in AI-driven computer vision and edge intelligence, with the value of intellectual property increasing as the number of supported camera types and use cases grows, strengthening the company's position in the market.
See More
