Major United States defense contractors are experiencing a dramatic surge in sales and record order backlogs as the Pentagon rushes to replenish weapons stockpiles. According to Reuters, defense giant Lockheed Martin lifted its 2026 sales and profit forecasts as the U.S.-Israeli war on Iran and a prolonged Russia-Ukraine conflict drain the military’s inventory.
Defense Giants See Surging Sales and Massive Order Backlogs Amid Global Conflicts
President Donald Trump has urged defense contractors to increase production following a White House meeting attended by the chief executives of major firms, including RTX, Lockheed Martin, Boeing, Northrop Grumman, BAE Systems, L3Harris Missile Solutions, and Honeywell Aerospace, as reported by Aljazeera. These companies are sitting on billions of dollars in order backlogs.
Lockheed Martin reported that its total backlog grew to $230.4 billion, representing a 38.3% increase from $166.5 billion the previous year. The company adjusted its expected 2026 revenue to a range between $79.75 billion and $81.75 billion, up from its earlier forecast of $77.5 billion to $80 billion.
Production Ramps Up for Key Missile and Munition Systems
The conflict has driven exceptional revenue growth in specific manufacturing segments. Lockheed’s missiles and fire control business saw revenue rise nearly 20% to $4.1 billion, a jump driven by a production ramp-up of PAC-3 and Precision Strike missiles, which have been used in the war on Iran. Production of THAAD missile interceptors also increased after Lockheed signed a $35 billion contract with the U.S. government in June to quadruple output.
Pentagon data indicates that the United States has used more than 50,000 rockets, missiles, and rocket-propelled munitions since the start of the Russia-Ukraine conflict in 2022 through the U.S. attack on Iran. In addition to high-end interceptors, the military has incorporated lower-cost options, such as LUCAS one-way attack drones produced by SpektreWorks at $35,000 per unit, while continuing to deploy major air assets like the F-35 Lightning II stealth fighter.
Global Defense Sector and European Expansion
The ripple effects of heightened geopolitical tensions extend internationally. European defense firms are also experiencing massive growth and record-high order backlogs, according to CNBC. Italian defense firm Leonardo announced plans to double its profits by 2030, while German arms maker Rheinmetall forecast that its sales could grow as much as 45%. Rheinmetall CEO Armin Papperger noted that his company is in a prime position to arm the U.S. during the conflict, telling investors there is a massive 10-year need for its products.
Data compiled across major European defense firms—including Rheinmetall, Leonardo, Bae Systems, France’s Thales, Germany’s Hensoldt, and Sweden’s Saab—shows that annual revenues rose an average of 57% between 2021 and 2025, with order intakes surging an average of 135% over the same period.
Meanwhile, Israeli defense companies are reporting unprecedented financial figures as well. According to Jpost, public defense companies alongside state-owned Rafael Advanced Defense Systems and Israel Aerospace Industries (IAI) hold a combined order backlog exceeding $80 billion. Elbit Systems closed 2025 with a record order backlog of $28.1 billion, while IAI reported an order backlog of $29 billion.
Capacity Constraints and Manufacturing Bottlenecks
Despite surging demand, industry analysts caution that defense manufacturers face operational limits. Bank Hapoalim research analyst David Levinson explained that defense industries have a limited “top speed,” constrained by factory infrastructure and the long training times required for skilled personnel. Companies can realistically grow sales at a double-digit rate of 15% to 20% per year at most.
Investing in factories and hiring workers takes time,
Levinson said, noting a global bottleneck in the ammunition sector that makes companies careful not to sign contracts they cannot fulfill.
