Lockheed Martin stock jumped 6.2% in early trading after President Trump called for a $1.5 trillion U.S. defense budget by 2027, up from roughly $1 trillion previously. The surge reflected investor optimism about a potential revenue boost for Lockheed and its peers. The president also instructed defense contractors to channel new funding into weapons production and maintenance rather than dividends or stock buybacks, and capped executive pay at $5 million per year. By 10:50 a.m. ET, Lockheed Martin’s shares led gains in the S&P 500 defense sector, outpacing peers such as Northrop Grumman and RTX.

While additional defense spending promises higher top-line growth—Lockheed has posted sub-3% annual revenue growth over the past five years—the requirement to reinvest all new funds into capital expenditures is set to intensify margin pressure. Lockheed’s gross margin has fallen from 10.2% two years ago to 5.7% over the last 12 months, and analysts project further declines as the company accelerates production of F-35s and other platforms. Lockheed delivered a record 191 F-35 fighter jets in 2025, up from 142 in the prior year, underscoring the scale of the required manufacturing ramp-up and the heavy upfront investment it demands.