Defense boom mixes old weapons with new tech

Traditional weapons still driving growth

Lockheed Martin reported a 24% jump in missiles revenue in the third quarter. RTX secured multibillion-dollar contracts for established missile systems. Renk saw military vehicle orders surge 46% in the first nine months.

New tech enhances rather than replaces

Hensoldt reported a 52% jump in optronics revenue, much from conventional military equipment including tanks and armored vehicles. Rheinmetall's air defense business, including counter-drone systems, reported 63% revenue growth.

Drones transform platforms, not replace them

Tanks and other weapons are increasingly integrated into connected, data-driven battlefield networks rather than being displaced by drone technology, according to Morningstar analysis.

Rearmament boom is structural, analysts say

Defense primes have seen order books swell since Russia's full-scale invasion of Ukraine in early 2022. Analysts say the rearmament boom is structural and will continue even if wars end.

Europe faces pressure to catch up

Europe must play catch-up amid increasing uncertainty over U.S. security guarantees and Russia's next move, after decades of military underfunding, analysts say.

NATO plans major counter-drone investment

NATO plans to invest more than forty billion dollars in counter-drone capabilities over the next five years. Secretary General Mark Rutte warned that drones have fundamentally transformed modern warfare.

“drones have fundamentally transformed modern warfare”

Air defense market remains underinvested

Hensoldt CFO Christian Ladurner told CNBC that demand for air defense systems is growing as militaries confront threats from small drones to ballistic missiles. The market grows 20% yearly but remains underinvested.

“underinvested”

U.S. midterm results cloud spending outlook

Democratic control of Congress makes a proposed 1.5 trillion dollar budget unlikely and may weigh on military spending growth through 2029, dampening defense stock expectations.

Europe expected to maintain spending plans

Morningstar analyst Loredana Muharremi told CNBC that even with stronger U.S. backing, Europe is expected to stick to its spending plans. Building military capacity to deter Russia takes years of investment.