The Iran war has produced few clear winners, but one sector stands apart. U.S. defense companies are experiencing a surge in orders driven by more than the conflict itself.
The Pentagon is moving to replenish weapon and munition stockpiles depleted during the opening phase of the Iran campaign. Arms sent to Ukraine under previous support packages have also drawn down inventories. The result is billions of dollars in new contracts, and defense firms are positioned to capitalize.
“The administration’s prioritization of defense industrial-based investment and modernization spending provides a constructive backdrop as we execute,” said Jim Taiclet, CEO of Lockheed Martin, during an earnings call. “This is a golden opportunity right now based on who’s in government, their experience, their willingness to change the demand that they have for what we do.”
Congress allocated a record $901 billion to the Defense Department for 2026. Trump’s budget request for 2027 proposed a $1.5 trillion defense spending package — a 40 percent increase — that would likely require cuts to domestic programs including Medicaid and Medicare. The figure includes tens of billions for new naval and aerial assets and $18 billion for the Golden Dome missile defense system.
Those numbers predate the Iran conflict. As the war extended from days into weeks, costs climbed. The Pentagon reportedly sought an additional $200 billion from the White House. When asked about the figure, Defense Secretary Pete Hegseth said the number “could move,” adding: “It takes money to kill bad guys.”
The spending surge extends a long-running trend. A study by the Quincy Institute and Brown University found that private contractors received 41 percent of military spending in the 1990s. Between 2020 and 2024, that share reached 54 percent. Of the Pentagon’s $4.4 trillion budget over that period, approximately $2.4 trillion went to contractors. The five largest — Lockheed Martin, RTX, Boeing, General Dynamics, and Northrop Grumman — collectively received $771 billion.
Defense executives met with Trump to discuss quadrupling production targets to fulfill commitments. U.S. firms are sitting on hundreds of billions in backlogs covering systems from Patriot interceptor missiles to F-35 fighter jets. RTX closed 2025 with $107 billion in defense-specific orders; Lockheed Martin reported a record $194 billion in expected revenue from backlog.
Backlogs are growing faster than firms can deliver, suggesting the industry’s run may be just beginning. European defense spending is also climbing — McKinsey projects it will reach €800 billion by 2030 — though new EU rules and homegrown competitors may limit how much of that flows to U.S. companies.
A CSIS analysis found that roughly half of the U.S. military’s most expensive missile stocks were depleted in the first seven weeks of the Iran conflict. The authors estimated restocking could take between one and four years. That timeline spells continued demand for contractors.