New Global Deals Boost These 2 Defense Leaders

Key Points

• Defense contracts are increasingly shaped more by trade and security deals than conflict, driving steady demand for top industry players.
• Boeing is gaining from both commercial aviation recovery and defense growth, positioning it as a momentum-driven opportunity.
• Lockheed Martin offers undervalued upside backed by a strong backlog and institutional investment, making it a resilient value play.

Most investors view the defense and aerospace sectors through a single lens, becoming bullish only when international conflicts escalate and bearish when resolution prospects arise. While this makes sense (on paper), there is a lot more that goes on behind the scenes in terms of drivers for future earnings and contract volumes in the space.

Today, as part of ongoing trade tariff negotiations between the United States and the European Union, defense contracts are increasingly being tied to trade concessions. Most recently, Ukraine proposed a $100 billion weapons procurement deal with the United States, backed by European partners.

Since these developments aren’t tied to news of renewed conflict, they didn’t get a lot of media coverage so retail investors may not have picked up on the trend. However, they provide sustainable tailwinds for defense stocks like Boeing Co. NYSE: BA and Lockheed Martin Corp. NYSE: LMT—and a reason investors should keep these two stocks on their watchlists.

Why Boeing’s Momentum Looks Set to Continue

While the setup is equally bullish for both of these companies, Boeing is getting the best treatment from the market so far, and there’s a reason for that. Since the company is exposed to both the defense and commercial sides of the equation, Boeing is inherently tapped into other factors driving the commercial industry, particularly airplanes.

As currency valuations shift and travel resumes, new commercial orders boost Boeing’s topline, adding fuel to its defense-driven upside. This commercial strength, paired with defense contracts, has pushed Boeing’s stock to approximately 95% of its 52‑week high. Investors perceive this as momentum in motion, and analysts agree, giving the stock a Moderate Buy rating and assigning it a consensus price target of $228.90. 

Earnings Beat Amplifies the Lockheed Case

Lockheed Martin occupies a different strategic vantage point. Trading near 72% of its 52‑week high, it appears that much of the downside has already been priced in. But the bullish outlook, however, isn’t yet reflected in its valuation, and institutional investors like AQR Capital Management are taking notice.

In mid‑August, AQR increased its stake in Lockheed Martin by 6.9%, bringing its total holding to $400 million. This suggests AQR is creating a position ahead of the upside analysts have yet to fully price in.

Here is something investors need to consider, though, before they call this homework done for Lockheed Martin. In it's latest quarterly earnings report, the company reported $7.29 in earnings per share (EPS), beat the $6.57 estimate—and that is even before the new contracts and orders started coming in. 

This gives analysts a compelling reason to raise forecasts, further fueling share‑price appreciation. Getting in early could offer gains as the market catches up. Analysts have given LMT stock a consensus price target of $506.35, reflecting a potential upside of over 13%.

Two Paths to Potential: Momentum vs. Value

Boeing and Lockheed Martin represent two distinct—but highly complementary—investment approaches within the defense and aerospace sectors.

Boeing is riding a wave of renewed commercial travel and steady defense contract growth. That dual exposure has made it a top pick for investors chasing near-term upside. But with momentum comes volatility, especially as macro conditions evolve.

Lockheed Martin, on the other hand, offers a more grounded investment case. Its massive defense backlog and consistent earnings make it less susceptible to market swings. Trading at a discount to its historical highs and with institutional backing on the rise, Lockheed provides potential upside with less risk.

Investors don’t have to choose between growth and stability. Holding both names can offer diversified exposure to a sector poised for expansion, driven by structural demand, not just geopolitical shockwaves.