Defense Stocks Underperform Amid Geopolitical Tensions
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 28 2026
0mins
Source: CNBC
- Defense ETF Decline: The iShares U.S. Aerospace & Defense ETF (ITA) has dropped approximately 12% since the escalation of the Middle East conflict in March, contrasting with a 3.5% rise in the S&P 500, indicating that defense stocks may break a five-year winning streak.
- Disappointing Earnings: RTX and Lockheed Martin reported earnings that fell short of Wall Street expectations, with declines of over 11% and 13% respectively, reflecting concerns that earnings forecasts for the defense sector were overly optimistic, leading to significant sell-offs.
- Geopolitical Concerns: Analysts highlight that the uncertain geopolitical landscape, particularly regarding the wars in Iran and Ukraine, has heightened market worries about the defense industry, although long-term demand for rebuilding stockpiles remains, short-term positive catalysts are lacking.
- Budget Uncertainty: Domestic investors are increasingly concerned about the prospects of passing the defense reconciliation budget before the November midterm elections, which could negatively impact defense stocks if not approved, although a partial Democratic control of Congress may not be entirely detrimental to defense spending.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy RTX?" 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 RTX
Wall Street analysts forecast RTX stock price to rise
14 Analyst Rating
9 Buy
5 Hold
0 Sell
Moderate Buy
Current: 178.610
Low
168.00
Averages
195.77
High
215.00
Current: 178.610
Low
168.00
Averages
195.77
High
215.00
About RTX
RTX Corporation is an aerospace and defense company, which provides advanced systems and services for commercial, military, and government customers worldwide. The Company operates through three segments: Collins Aerospace, Pratt & Whitney, and Raytheon. Collins Aerospace segment provides technologically advanced aerospace and defense products and aftermarket service solutions for civil and military aircraft manufacturers, commercial airlines, and regional, business and general aviation, as well as for defense and commercial space operations. The Pratt & Whitney segment supplies aircraft engines for commercial, military, business jet, and general aviation customers. The Raytheon segment provides defensive and offensive threat detection, tracking and mitigation capabilities for the United States and foreign government and commercial customers. The Raytheon designs, develops, and provides advanced capabilities in integrated air and missile defense, smart weapons, missiles and others.
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.
Collins Aerospace Expands Facility, Creating Over 100 High-Tech Jobs
- Investment Expansion: Collins Aerospace is investing $26.5 million to expand its Largo, Florida facility, aimed at accelerating the production of commercial aviation radars and multi-domain security solutions, thereby enhancing the company's competitiveness in the aviation and defense markets.
- Job Creation: This expansion is expected to create over 100 high-skilled jobs across engineering and factory operations, further driving local economic development and enhancing the region's appeal for technical talent.
- Critical Technology Delivery: The new facility will support the FAA's Radar System Replacement Program, producing the Condor Mk3 and ASR-XM radars, ensuring passenger safety and military operational efficiency to meet the growing market demand.
- Regional Economic Impact: Collins Aerospace's expansion not only strengthens the military and defense cluster in the Tampa Bay area but also solidifies Florida's leadership in aviation manufacturing and national security, attracting more high-tech manufacturers to the state.
See More
Germany Revives Talks with U.S. on Tomahawk Missile Sale
- Missile Sale Negotiations Revived: German Defense Minister Boris Pistorius plans a trip to Washington to push for the purchase proposal of Tomahawk missiles and their launchers first submitted last July, despite the U.S. not responding, highlighting Germany's urgent need to enhance its defense capabilities.
- Strained U.S.-Germany Relations: The success of this visit hinges on whether Pistorius can secure a meeting with U.S. Secretary of War Hegseth, which is uncertain due to the deteriorating relationship between Trump and German Chancellor Merz over the Iran war, potentially impacting the negotiation process.
- U.S. Troop Deployment Adjustments: The Pentagon announced last week that it would reassign a long-range fires battalion originally scheduled for deployment this year, reflecting a strategic shift in U.S. NATO arrangements, especially after Trump's decision to withdraw 5,000 troops from Germany, intensifying Germany's security concerns.
- Production Capacity Increase: In February, the Pentagon signed a seven-year deal with Raytheon to increase Tomahawk missile production, addressing depleted stockpiles due to ongoing conflicts, indicating the U.S. commitment to enhancing its military capabilities and readiness.
See More
Trump Upgrades Golden Dome Missile Defense Initiative
- Golden Dome Initiative Launched: President Trump’s Executive Order 14186, published on January 27, 2025, inaugurated the Golden Dome program aimed at constructing a next-generation missile defense system to deter any foreign aerial attacks, reflecting the U.S. strategic commitment to national defense.
- Massive Contract Value: The U.S. Space Force announced awarding $3.2 billion in defense contracts to 12 companies to develop space-based interceptors, which are expected to significantly enhance the country's missile defense capabilities by filling existing gaps in the system.
- Diverse Participation: The contract includes well-known defense firms like Lockheed Martin and Northrop Grumman, alongside emerging space technology companies such as Gitai and True Anomaly, showcasing the Space Force's strategy to attract both traditional and non-traditional vendors for this initiative.
- Investment Opportunities Arise: Lockheed Martin stands out with a price-to-earnings ratio of 15.8 and a projected earnings growth rate of 18.5%, making it a focal point for investors looking to capitalize on the Golden Dome initiative, as it is expected to benefit from future contracts and solidify its leadership in the defense market.
See More
Raytheon Secures Contract for Australian Frigate Program
- Contract Signing: Raytheon has secured a contract with Mitsubishi Heavy Industries to provide SeaRAM self-defense systems for Australia's Sea3000 General Purpose Frigate program, marking a significant expansion in the company's presence in the Asia-Pacific defense market despite undisclosed financial terms.
- Project Background: The Sea3000 program aims to replace the retiring Anzac-class frigates with 11 upgraded Mogami-class frigates, reflecting Australia's ongoing investment in naval modernization and enhanced maritime capabilities.
- Technical Support: Under the agreement, Raytheon will supply SeaRAM launchers, Blast Test Vehicles, and technical services to support the installation and testing of the first three frigates being built in Japan, ensuring the effectiveness and reliability of the systems.
- Delivery Timeline: Deliveries under the contract are expected to begin in late 2028, providing Raytheon ample time to optimize production processes and ensure timely delivery, thereby further solidifying its position in the international defense market.
See More
Raytheon Secures Contract for Australia's Naval Defense System
- Contract Award: Raytheon has secured a contract with Mitsubishi Heavy Industries to provide SeaRAM® ship self-defense systems for Australia's Sea3000 General Purpose Frigate program, marking the country's first procurement of this advanced defense system.
- Frigate Replacement Plan: The Sea3000 program aims to replace the decommissioning Anzac-class frigates with 11 upgraded Mogami-class frigates, enhancing the naval force's operational capabilities.
- Technology Integration: The SeaRAM system combines the Phalanx Close In Weapon System and Rolling Airframe Missile to provide autonomous terminal defense against cruise missiles and other airborne threats, significantly boosting the Royal Australian Navy's defense capabilities.
- Delivery Timeline: Work on this contract will take place in Louisville, Kentucky, with deliveries expected to commence in late 2028, further solidifying Australia's position within the global RAM user community.
See More
Rocket Lab Shares Surge 34% on Strong Q1 Performance and Strategic Moves
- Significant Revenue Growth: Rocket Lab's Q1 revenue surged 64% year-over-year to $200 million, reflecting strong demand for its launch services and solidifying its leadership position in the space systems sector.
- Record Contract Signings: The company signed 31 new contracts for its Electron orbital small rocket and HASTE hypersonic test rocket during the quarter, along with five dedicated launches for its developmental Neutron launch vehicle, resulting in a 20% increase in backlog to $2.2 billion.
- Enhanced Strategic Partnerships: Rocket Lab partnered with defense giant RTX to support the U.S. Defense Department's Space Based Interceptor program, providing launch and satellite technology, thereby increasing its influence in the defense sector.
- Acquisition to Strengthen Capabilities: The company announced the acquisition of robotics leader Motiv Space Systems to bolster its satellite components supply chain, enabling greater involvement in future lunar and planetary exploration missions, showcasing its long-term strategic vision in the aerospace industry.
See More
Collins Aerospace Expands Facility, Creating Over 100 High-Tech Jobs
- Investment Expansion: Collins Aerospace is investing $26.5 million to expand its Largo, Florida facility, aimed at accelerating the production of commercial aviation radars and multi-domain security solutions, thereby enhancing the company's competitiveness in the aviation and defense markets.
- Job Creation: This expansion is expected to create over 100 high-skilled jobs across engineering and factory operations, further driving local economic development and enhancing the region's appeal for technical talent.
- Critical Technology Delivery: The new facility will support the FAA's Radar System Replacement Program, producing the Condor Mk3 and ASR-XM radars, ensuring passenger safety and military operational efficiency to meet the growing market demand.
- Regional Economic Impact: Collins Aerospace's expansion not only strengthens the military and defense cluster in the Tampa Bay area but also solidifies Florida's leadership in aviation manufacturing and national security, attracting more high-tech manufacturers to the state.
See More
Germany Revives Talks with U.S. on Tomahawk Missile Sale
- Missile Sale Negotiations Revived: German Defense Minister Boris Pistorius plans a trip to Washington to push for the purchase proposal of Tomahawk missiles and their launchers first submitted last July, despite the U.S. not responding, highlighting Germany's urgent need to enhance its defense capabilities.
- Strained U.S.-Germany Relations: The success of this visit hinges on whether Pistorius can secure a meeting with U.S. Secretary of War Hegseth, which is uncertain due to the deteriorating relationship between Trump and German Chancellor Merz over the Iran war, potentially impacting the negotiation process.
- U.S. Troop Deployment Adjustments: The Pentagon announced last week that it would reassign a long-range fires battalion originally scheduled for deployment this year, reflecting a strategic shift in U.S. NATO arrangements, especially after Trump's decision to withdraw 5,000 troops from Germany, intensifying Germany's security concerns.
- Production Capacity Increase: In February, the Pentagon signed a seven-year deal with Raytheon to increase Tomahawk missile production, addressing depleted stockpiles due to ongoing conflicts, indicating the U.S. commitment to enhancing its military capabilities and readiness.
See More
Trump Upgrades Golden Dome Missile Defense Initiative
- Golden Dome Initiative Launched: President Trump’s Executive Order 14186, published on January 27, 2025, inaugurated the Golden Dome program aimed at constructing a next-generation missile defense system to deter any foreign aerial attacks, reflecting the U.S. strategic commitment to national defense.
- Massive Contract Value: The U.S. Space Force announced awarding $3.2 billion in defense contracts to 12 companies to develop space-based interceptors, which are expected to significantly enhance the country's missile defense capabilities by filling existing gaps in the system.
- Diverse Participation: The contract includes well-known defense firms like Lockheed Martin and Northrop Grumman, alongside emerging space technology companies such as Gitai and True Anomaly, showcasing the Space Force's strategy to attract both traditional and non-traditional vendors for this initiative.
- Investment Opportunities Arise: Lockheed Martin stands out with a price-to-earnings ratio of 15.8 and a projected earnings growth rate of 18.5%, making it a focal point for investors looking to capitalize on the Golden Dome initiative, as it is expected to benefit from future contracts and solidify its leadership in the defense market.
See More
Raytheon Secures Contract for Australian Frigate Program
- Contract Signing: Raytheon has secured a contract with Mitsubishi Heavy Industries to provide SeaRAM self-defense systems for Australia's Sea3000 General Purpose Frigate program, marking a significant expansion in the company's presence in the Asia-Pacific defense market despite undisclosed financial terms.
- Project Background: The Sea3000 program aims to replace the retiring Anzac-class frigates with 11 upgraded Mogami-class frigates, reflecting Australia's ongoing investment in naval modernization and enhanced maritime capabilities.
- Technical Support: Under the agreement, Raytheon will supply SeaRAM launchers, Blast Test Vehicles, and technical services to support the installation and testing of the first three frigates being built in Japan, ensuring the effectiveness and reliability of the systems.
- Delivery Timeline: Deliveries under the contract are expected to begin in late 2028, providing Raytheon ample time to optimize production processes and ensure timely delivery, thereby further solidifying its position in the international defense market.
See More
Raytheon Secures Contract for Australia's Naval Defense System
- Contract Award: Raytheon has secured a contract with Mitsubishi Heavy Industries to provide SeaRAM® ship self-defense systems for Australia's Sea3000 General Purpose Frigate program, marking the country's first procurement of this advanced defense system.
- Frigate Replacement Plan: The Sea3000 program aims to replace the decommissioning Anzac-class frigates with 11 upgraded Mogami-class frigates, enhancing the naval force's operational capabilities.
- Technology Integration: The SeaRAM system combines the Phalanx Close In Weapon System and Rolling Airframe Missile to provide autonomous terminal defense against cruise missiles and other airborne threats, significantly boosting the Royal Australian Navy's defense capabilities.
- Delivery Timeline: Work on this contract will take place in Louisville, Kentucky, with deliveries expected to commence in late 2028, further solidifying Australia's position within the global RAM user community.
See More
Rocket Lab Shares Surge 34% on Strong Q1 Performance and Strategic Moves
- Significant Revenue Growth: Rocket Lab's Q1 revenue surged 64% year-over-year to $200 million, reflecting strong demand for its launch services and solidifying its leadership position in the space systems sector.
- Record Contract Signings: The company signed 31 new contracts for its Electron orbital small rocket and HASTE hypersonic test rocket during the quarter, along with five dedicated launches for its developmental Neutron launch vehicle, resulting in a 20% increase in backlog to $2.2 billion.
- Enhanced Strategic Partnerships: Rocket Lab partnered with defense giant RTX to support the U.S. Defense Department's Space Based Interceptor program, providing launch and satellite technology, thereby increasing its influence in the defense sector.
- Acquisition to Strengthen Capabilities: The company announced the acquisition of robotics leader Motiv Space Systems to bolster its satellite components supply chain, enabling greater involvement in future lunar and planetary exploration missions, showcasing its long-term strategic vision in the aerospace industry.
See More
