Stocks surge as war-driven demand boosts global defence firms

Highlight

• Iran war boosts US defence stocks: Northrop +5%, RTX +4.5%, Lockheed +3%
• Top 100 defence firms earned $679b; European firms expand amid Ukraine war
• 39 US firms on SIPRI top 100 vs 8 Chinese
• Top US contractors 2024 revenue: Lockheed $68.4b, RTX $43.6b, Northrop $37.9b
• Global defence spending up 9.4% to $2.7T; demand drives orders and stock growth

Billions of dollars have already been spent by the United States on weapons in the war with Iran, making war a highly profitable business for defence contractors.

Last week, stock prices for major US arms-producing companies rose, including Northrop Grumman (up 5%), RTX (up 4.5%) and Lockheed Martin (up 3%).

In 2024, the top 100 defence companies in the world generated more than $679b in revenue, according to the Stockholm International Peace Research Institute (SIPRI).

European heavyweights such as the UK's BAE Systems, Italy's Leonardo, the trans-European Airbus, France's Thales and Germany's Rheinmetall are among the top 20 companies, with many expanding amid the Russia-Ukraine conflict.

Largest US defence contractors

According to SIPRI's report, 39 US contractors appear on its list of the top 100 defence companies, far exceeding China's eight groups.

The five largest US defence companies are Lockheed Martin, RTX, Northrop Grumman, General Dynamics and Boeing.

Lockheed Martin, the world's largest defence contractor formed in 1995 through the merger of Lockheed and Martin Marietta, generated $68.4b in revenue in 2024 and manufactures aircraft such as the F-35 as well as missile and space systems.

RTX, created in 2020 after the merger of Raytheon and United Technologies, focuses on missile systems, jet engines and avionics, with $43.6b of its 2024 revenue coming from defence.

Northrop Grumman, formed in 1994 after Northrop acquired Grumman, produces stealth aircraft such as the B-21 Raider and develops space and nuclear modernisation systems, earning $37.9b from defence in 2024.

General Dynamics develops nuclear submarines, battle tanks and armoured vehicles and recorded $33.6b in defence revenue in 2024.

Boeing, founded in 1916, generates revenue from commercial aircraft production as well as defence and space programmes including the F/A-18E/F Super Hornet, AH-64 Apache and P-8 Poseidon, with $30.6b coming from defence in 2024.

Israel's major defence firms

According to SIPRI, three Israeli companies appear on the list of the world's top 100 defence companies.

Elbit Systems, Israel's largest defence company, specialises in drones, surveillance systems and battlefield electronics, generating $6.3b from defence in 2024.

Israel Aerospace Industries focuses on missile defence systems, satellites, combat drones and radar technology and earned $5.2b from defence.

Rafael, the developer of Israel's Iron Dome missile defence system, generated $4.7b from defence in 2024.

Defence spending and stock growth

According to SIPRI, global defence spending rose 9.4% in 2024 to reach $2.7 trillion.

NATO members have also pledged to increase their defence budgets from 2% to 5% of GDP by 2035, adding hundreds of billions of dollars in annual spending.

To replenish rapidly depleting munitions used in the wars in Ukraine and the Middle East, major weapons contractors are investing billions in new orders, responding to rising demand and driving up their stock prices.

From March 2023 to March 2026, RTX recorded the largest stock increase among major US contractors at 110%, followed by Northrop Grumman at 60%, General Dynamics at 57%, Lockheed Martin at 37% and Boeing at 5%.