Expectations of increased US military spending boost arms company stocks

Despite the economic losses caused by wars, there are parties that benefit from them, particularly defense companies, which often experience increased demand for their products and services as geopolitical tensions escalate.

Defense companies emerge as a suitable investment option during times of war. US companies recorded significant gains over the past week as a result of the outbreak of war between Israel and Iran, supported by expectations of increased military spending from the US Department of Defense and countries around the world.

Shares of Lockheed Martin rose 3.7% during the week, supported by expectations of increased military spending among the United States’ regional allies. General Dynamics followed, with its stock rising 3.4%, benefiting from the accelerating trend toward strengthening defense and logistics systems.

Shares of Northrop Grumman also jumped 4.0%, thanks to growing global interest in high-precision surveillance and attack technologies. As for the American company RTX, its shares rose by 3.3%, amid expectations of more defense deals for air and missile defense systems. Investors typically turn to these companies during times of crisis, with some defense stocks becoming attractive investment vehicles amid escalating threats. These gains are expected to continue if tensions persist or the war expands, enhancing defense companies’ opportunities to boost their revenues and government contracts in the coming period.