Defense: War in the Middle East, a windfall for the American arms industry

In presenting their results for the first quarter of 2026, American groups RTX, Northrop Grumman, and GE Aerospace all reported a significant increase in orders. Following the hope for a “lasting solution” in the Middle East, RTX CEO Chris Calio indicated during a conference call with analysts that the company was working with the US Department of Defense “to accelerate the production of munitions.” In recent months, the ministry has increased agreements and contracts with mostly American firms to boost arms production, especially missiles such as Tomahawk, Patriot, GEM-T, AMRAAM, and others.

With just Raytheon, a subsidiary of RTX, Chris Calio recalled the recent signing of five “major framework agreements” considered “vital for national security.” The group has already invested nearly $900 million to increase production capacity. According to him, “the current situation clearly demonstrates the need for ammunition, integrated air defense technologies, missiles, and advanced capabilities to counter evolving threats.” “We are seeing a very strong demand, both nationally and internationally,” he noted. In response to this situation, the group has revised several annual forecasts upward.

Similar findings were reported by GE Aerospace, which recorded record orders for its defense products over the past decade, describing a “strong start” to 2026. Despite emphasizing macroeconomic uncertainties, the group maintained its previous annual forecasts. “We are currently assuming that the conflict (in the Middle East) and its effects will continue into the summer,” commented Larry Culp, the group’s CEO, during a conference call with analysts.

“In defense, we continue to rapidly execute highly prioritized military needs to support the United States and its allies,” he assured. However, the group, which manufactures engines for Boeing and Airbus commercial aircraft, is also feeling the impact of reduced commercial aviation in the Middle East where flights are limited. This particularly affects maintenance activities.

From Northrop Grumman’s side, the priority is to deliver equipment and ammunition as quickly as possible, with orders increasing in quantity. Like its competitors, the group has expanded its production capacity with around twenty new factories in the United States in the past two years, according to CEO Kathy Warden. “The conflict in Iran has clearly created an increased sense of urgency,” she emphasized.

In this context, all these contracts will provide “long-term visibility” to the sector, as highlighted by Chris Calio. Especially as government defense spending continues to rise globally.

“President (Donald) Trump has proposed a $1.5 trillion budget for national defense in 2027,” announced Jules Hurst, Under Secretary of Defense, during a briefing at the Pentagon on Tuesday morning. “This 42% increase will strengthen our defense industrial base by increasing the production of major armament systems, reinforcing the supply chain, and supporting tens of thousands of small and medium-sized enterprises,” he added. According to him, “over $750 million, almost the entire defense budget for 2022,” will be allocated to developing capabilities and purchasing armament systems.

Boeing, a defense contractor, is set to release its results on Wednesday morning, and Lockheed Martin on Thursday.