Trump Proposes U.S. Military Budget Increase to $1.5 Trillion by 2027
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 08 2026
0mins
Should l Buy DRS?
Source: Benzinga
- Military Budget Surge: Trump proposed increasing the U.S. military budget from $900 billion to $1.5 trillion by 2027, which is expected to significantly enhance investment attractiveness in the defense sector and drive related stock prices higher.
- Defense Stock Rebound: Following Trump's budget announcement, the iShares U.S. Aerospace & Defense ETF rose 1.4% and the State Street SPDR Aerospace & Defense ETF surged 3.3%, fully reversing the previous day's losses and indicating market optimism regarding defense spending.
- Small Contractors Lead Gains: Kratos Defense & Security Solutions saw its stock jump 18%, Red Cat Holdings gained 12%, and Karman Holdings rose 10%, showcasing strong investor confidence in small defense firms during the market rebound.
- Large Firms Steady Growth: Major defense companies like Leonardo DRS, Huntington Ingalls, and L3Harris saw stock increases of 9%, 7%, and 6% respectively, indicating that expectations of increased defense spending will bolster their long-term growth potential.
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Analyst Views on DRS
Wall Street analysts forecast DRS stock price to rise
6 Analyst Rating
4 Buy
2 Hold
0 Sell
Moderate Buy
Current: 47.100
Low
40.00
Averages
47.33
High
54.00
Current: 47.100
Low
40.00
Averages
47.33
High
54.00
About DRS
Leonardo DRS, Inc. is a provider of advanced defense technology to the United States national security customers and allies around the world. It specializes in the design, development and manufacture of advanced sensing, network computing, force protection, and electric power and propulsion, and other mission-critical technologies. It is a provider of defense products and technologies that are used across land, air, sea, space, and cyber domains. Its segments include Advanced Sensing and Computing (ASC) and Integrated Mission Systems (IMS). The ASC segment designs, develops, and manufactures sensing and network computing technology that enables real-time situational awareness required for operational decision making and execution by its customers. The IMS segment designs, develops, manufactures, and integrates power conversion, control and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation and logistics 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.
Middle East Tensions Weigh on European Stocks
- Market Reaction: European stocks opened the new trading week on a downbeat note, with the Stoxx 600 index falling 0.7%, reflecting investor concerns over Middle Eastern tensions, as most sectors outside of oil and gas experienced declines.
- Aviation Sector Impact: Travel and leisure stocks were notably affected, with Wizz Air, EasyJet, and Lufthansa dropping 6.9%, 3.8%, and 3.9% respectively, primarily due to heightened worries over jet fuel supply to European airports, which dampened market confidence.
- Surge in Oil Prices: Following Trump's announcement of a blockade on the Strait of Hormuz, global oil prices surged, with Brent crude rising 6.8% to $101.68 per barrel and WTI gaining 7.2% to $103.59, indicating market apprehension regarding energy supply.
- Political Ramifications: Trump's threat of imposing approximately 50% tariffs on China if it provides military assistance to Iran could escalate regional tensions, while political changes in Hungary also drew market attention, with the forint strengthening 2.51% against the dollar.
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- Defense Stocks Decline: Major European defense contractors saw significant declines, with CSG NV down approximately 9.7%, Rheinmetall off 5.7%, and Leonardo DRS declining about 5%, indicating market concerns over the defense sector's future amid peace deal reports.
- Market Reaction: Hensoldt and BAE Systems fell 7% and 3% respectively, while Swedish fighter jet maker Saab dipped 3.3%, reflecting investor pessimism regarding future defense spending in light of potential peace negotiations.
- Reconstruction Demand Rises: In contrast, construction and materials stocks like Buzzi, Holcim, and Heidelberg Materials climbed between 4.3% and 4.8%, as investors anticipated that progress toward peace could boost reconstruction and infrastructure demand across the region.
- Negotiation Optimism: Kyrylo Budanov, a key aide to Ukrainian President Zelenskiy, expressed optimism that negotiations could be nearing a settlement, further fueling market expectations for peace and stability in the region.
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- Record Defense Budget: The FY2026 U.S. defense budget has reached $1 trillion, with a FY2027 request of $1.5 trillion representing a 44% increase over FY2026, indicating a strong commitment to defense spending that is expected to drive market demand for related defense companies.
- Surge in Autonomous Systems Procurement: The U.S. Department of Defense plans to purchase over 200,000 autonomous systems by 2027, responding to urgent needs for sensor-rich, AI-driven platforms, particularly in countering emerging aerial threats and enhancing persistent surveillance capabilities.
- Major Contract Awards: Elbit Systems has secured a contract worth approximately $750 million to supply precision rocket systems to the Hellenic Armed Forces, reflecting an increase in international defense cooperation and sustained demand for high-tech weapon systems.
- Technological Innovation and Market Opportunities: VisionWave Holdings has received its first defense order from Latin America, showcasing the market potential of its AI-driven technology platform, while also signing a memorandum of understanding with a U.S. Tier-1 defense contractor, further solidifying its position in the global defense market.
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Leonardo DRS Schedules Q1 2026 Earnings Call
- Earnings Call Scheduled: Leonardo DRS has scheduled a conference call for May 5, 2026, at 10:00 a.m. (ET) to discuss its Q1 results, demonstrating the company's commitment to transparency and investor communication.
- Earnings Release Plan: The company plans to issue its quarterly earnings press release prior to the call, ensuring investors receive the latest financial information ahead of the meeting, which may enhance market expectations regarding the company's performance.
- Online Registration and Broadcast: Participants are required to register online to attend the call, with live audio broadcast and corresponding press release available on the investor relations website, increasing accessibility and interactivity of information.
- Replay Availability: A replay will be available approximately two hours after the call concludes and will remain accessible for 90 days on the company’s website, ensuring that investors who cannot participate live can still access key information, thereby strengthening the connection between the company and its investors.
See More
DRS Systems Secures $533.29M Contract for Infrared Countermeasures
- Significant Contract Value: DRS Systems has secured a $533.29 million IDIQ contract to produce and deliver infrared countermeasure assemblies for Navy and Army low-rate initial production programs, showcasing the company's strong competitive position in the defense sector.
- Project Completion Timeline: The work is expected to be completed by April 2030, with no funds obligated at the time of award, indicating the long-term strategic value of the contract and potential future revenue streams.
- Contracting Activity: The contract is managed by the Naval Air Systems Command, further solidifying DRS's position in the defense contracting market and potentially paving the way for future contract opportunities.
- Growth Objectives: DRS aims for 6%-8% organic revenue growth in 2026 while ramping up investments in innovation and capacity, reflecting the company's positive outlook on future market demand.
See More
Leonardo DRS Secures $25 Billion Military Contract
- Significant Contract Value: Leonardo DRS has been awarded a contract for the Advanced Technology Support Program V by the U.S. military, with a total potential value exceeding $25 billion, which is expected to provide substantial revenue growth support for the company over the next decade.
- Broad Technology Scope: The contract enables Leonardo DRS to deliver services in critical areas such as advanced sensing, computing, and integrated mission systems, further solidifying its leadership position in defense technology.
- Emerging Technology R&D: The contract will also advance Leonardo DRS's research and development in emerging technologies like quantum computing, nanoelectronics, and additive manufacturing, enhancing its innovation capabilities to meet customer demands.
- Positive Market Reaction: Following the contract announcement, Leonardo DRS's stock price rose by 0.27% in after-hours trading to $44.4, reflecting investor confidence in the company's future growth potential.
See More
Middle East Tensions Weigh on European Stocks
- Market Reaction: European stocks opened the new trading week on a downbeat note, with the Stoxx 600 index falling 0.7%, reflecting investor concerns over Middle Eastern tensions, as most sectors outside of oil and gas experienced declines.
- Aviation Sector Impact: Travel and leisure stocks were notably affected, with Wizz Air, EasyJet, and Lufthansa dropping 6.9%, 3.8%, and 3.9% respectively, primarily due to heightened worries over jet fuel supply to European airports, which dampened market confidence.
- Surge in Oil Prices: Following Trump's announcement of a blockade on the Strait of Hormuz, global oil prices surged, with Brent crude rising 6.8% to $101.68 per barrel and WTI gaining 7.2% to $103.59, indicating market apprehension regarding energy supply.
- Political Ramifications: Trump's threat of imposing approximately 50% tariffs on China if it provides military assistance to Iran could escalate regional tensions, while political changes in Hungary also drew market attention, with the forint strengthening 2.51% against the dollar.
See More
European Defense Stocks Plummet Amid Peace Deal Hopes
- Defense Stocks Decline: Major European defense contractors saw significant declines, with CSG NV down approximately 9.7%, Rheinmetall off 5.7%, and Leonardo DRS declining about 5%, indicating market concerns over the defense sector's future amid peace deal reports.
- Market Reaction: Hensoldt and BAE Systems fell 7% and 3% respectively, while Swedish fighter jet maker Saab dipped 3.3%, reflecting investor pessimism regarding future defense spending in light of potential peace negotiations.
- Reconstruction Demand Rises: In contrast, construction and materials stocks like Buzzi, Holcim, and Heidelberg Materials climbed between 4.3% and 4.8%, as investors anticipated that progress toward peace could boost reconstruction and infrastructure demand across the region.
- Negotiation Optimism: Kyrylo Budanov, a key aide to Ukrainian President Zelenskiy, expressed optimism that negotiations could be nearing a settlement, further fueling market expectations for peace and stability in the region.
See More
U.S. Defense Budget Hits Record High, Surge in Autonomous Systems Procurement
- Record Defense Budget: The FY2026 U.S. defense budget has reached $1 trillion, with a FY2027 request of $1.5 trillion representing a 44% increase over FY2026, indicating a strong commitment to defense spending that is expected to drive market demand for related defense companies.
- Surge in Autonomous Systems Procurement: The U.S. Department of Defense plans to purchase over 200,000 autonomous systems by 2027, responding to urgent needs for sensor-rich, AI-driven platforms, particularly in countering emerging aerial threats and enhancing persistent surveillance capabilities.
- Major Contract Awards: Elbit Systems has secured a contract worth approximately $750 million to supply precision rocket systems to the Hellenic Armed Forces, reflecting an increase in international defense cooperation and sustained demand for high-tech weapon systems.
- Technological Innovation and Market Opportunities: VisionWave Holdings has received its first defense order from Latin America, showcasing the market potential of its AI-driven technology platform, while also signing a memorandum of understanding with a U.S. Tier-1 defense contractor, further solidifying its position in the global defense market.
See More
Leonardo DRS Schedules Q1 2026 Earnings Call
- Earnings Call Scheduled: Leonardo DRS has scheduled a conference call for May 5, 2026, at 10:00 a.m. (ET) to discuss its Q1 results, demonstrating the company's commitment to transparency and investor communication.
- Earnings Release Plan: The company plans to issue its quarterly earnings press release prior to the call, ensuring investors receive the latest financial information ahead of the meeting, which may enhance market expectations regarding the company's performance.
- Online Registration and Broadcast: Participants are required to register online to attend the call, with live audio broadcast and corresponding press release available on the investor relations website, increasing accessibility and interactivity of information.
- Replay Availability: A replay will be available approximately two hours after the call concludes and will remain accessible for 90 days on the company’s website, ensuring that investors who cannot participate live can still access key information, thereby strengthening the connection between the company and its investors.
See More
DRS Systems Secures $533.29M Contract for Infrared Countermeasures
- Significant Contract Value: DRS Systems has secured a $533.29 million IDIQ contract to produce and deliver infrared countermeasure assemblies for Navy and Army low-rate initial production programs, showcasing the company's strong competitive position in the defense sector.
- Project Completion Timeline: The work is expected to be completed by April 2030, with no funds obligated at the time of award, indicating the long-term strategic value of the contract and potential future revenue streams.
- Contracting Activity: The contract is managed by the Naval Air Systems Command, further solidifying DRS's position in the defense contracting market and potentially paving the way for future contract opportunities.
- Growth Objectives: DRS aims for 6%-8% organic revenue growth in 2026 while ramping up investments in innovation and capacity, reflecting the company's positive outlook on future market demand.
See More
Leonardo DRS Secures $25 Billion Military Contract
- Significant Contract Value: Leonardo DRS has been awarded a contract for the Advanced Technology Support Program V by the U.S. military, with a total potential value exceeding $25 billion, which is expected to provide substantial revenue growth support for the company over the next decade.
- Broad Technology Scope: The contract enables Leonardo DRS to deliver services in critical areas such as advanced sensing, computing, and integrated mission systems, further solidifying its leadership position in defense technology.
- Emerging Technology R&D: The contract will also advance Leonardo DRS's research and development in emerging technologies like quantum computing, nanoelectronics, and additive manufacturing, enhancing its innovation capabilities to meet customer demands.
- Positive Market Reaction: Following the contract announcement, Leonardo DRS's stock price rose by 0.27% in after-hours trading to $44.4, reflecting investor confidence in the company's future growth potential.
See More
