Lockheed Martin led a sharp rally in defense equities after President Donald Trump announced plans to increase the U.S. defense budget to $1.5 trillion by 2027. Analysts estimate this proposal represents a roughly 50% boost over prior projections for fiscal 2027. On the day following the announcement, Lockheed Martin shares climbed more than 7%, outpacing other major contractors. Market commentators attribute the surge to investor expectations for larger future contract awards across Lockheed’s core segments, including fighter jets, missiles and naval systems.

Lockheed Martin’s Aeronautics division delivered a company-record 191 F-35 Lightning II fighters during 2025, surpassing the previous high of 142 jets. Production achieved a run rate five times that of rival platforms, while global fleet flight hours topped one million. Support contracts for software block upgrades and sustainment services accounted for nearly 30% of program revenue, with Lots 18-19 contracts finalized for up to 296 aircraft at a combined value of $24 billion.

Under a framework agreement with the U.S. Department of Defense, Lockheed Martin aims to ramp annual PAC-3 Missile Segment Enhancement interceptor output from 600 to 2,000 units over the next seven years. The company delivered 620 interceptors in 2025—a 20% increase year-over-year—and has already expanded capacity by more than 60% since 2023. The ramp-up supports sustained demand from the U.S. Army and 16 allied nations facing high expenditure rates in conflict zones.

Earlier in the week, share volatility intensified after President Trump criticized defense contractors for stock buybacks and dividends, prompting Lockheed Martin to reaffirm its commitment to prioritize manufacturing investments. The company clarified that it does not expect to alter its dividend policy in the near term, citing a forward dividend yield of 2.78% and strong free cash flow, which totaled $7.3 billion over the past four quarters.