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Additional Reading from MarketBeat.com 3 Large Caps That Benefit From Increased Defense SpendingAuthor: Dan Schmidt. Originally Published: 1/19/2026. 3 Large Caps That Benefit From Increased Defense Spending We're only three weeks into 2026, but it already feels like Billy Joel can add another verse to "We Didn't Start the Fire": Ukraine/Russia tensions boil, U.S. wants Caracas oil. Just like Microsoft and Adobe rode the software wave in Web 1.0, RAD Intel is riding the AI software wave in 2025. Their product helps brands instantly find the right audience and message using AI – solving the #1 waste in marketing: misfired ad spend.
Already trusted by a who's-who of Fortune 1000 brands and leading global agencies – with recurring seven-figure partnerships in place. With a Nasdaq ticker reserved, $RADI, it's early – but very real. $0.85 Won't Last – Secure Your Shares Now. Massive protests in Iran, Donald threatens Greenland. It's an uncertain time, which is one reason you're seeing safe-haven assets like gold and silver reach new all-time highs. In turbulent periods, defense stocks can also be a place for capital to hide — and that dynamic intensified when the Trump administration announced plans to increase defense spending to $1.5 trillion in 2027. Three Companies That Benefit from a Bolstered Defense Budget If the defense budget rises to $1.5 trillion in 2027, much of that cash will flow to large-cap companies in the aerospace and defense sector. Here are three names likely to win substantial Pentagon contracts going forward. Lockheed Martin: A Capital Compounder Back in Action Lockheed Martin Corp. (NYSE: LMT) has had a rough few years, but it remains the undisputed leader in U.S. defense contracting and has expanded its global footprint, becoming an indispensable partner to many NATO countries. The company leads the U.S. F-35 fighter program and delivered a record 191 F-35 Lightning II aircraft in 2025. Fulfilling nearly 200 deliveries to a variety of global customers (including Denmark and Italy) shows the production line can handle increased capacity for complex designs. Lockheed has also ramped up production of its PAC-3 MSE missile-defense system, targeting 2,000 units per year. Military hardware is typically lower margin than software like cybersecurity or AI, but a $1.5 trillion defense budget likely prioritizes expensive hardware such as planes, ships, and missiles. Lockheed already carries a backlog of nearly $180 billion, and its valuation and dividend yield make it attractive for both income and potential stock appreciation. 
Quick Look - The Trump administration announced plans to increase defense spending to $1.5 trillion in 2027, up from $900 billion in 2026.
- If an increasingly uncertain world, investors are turning to safe havens like precious metals, but defense stocks can also be good investments while the global picture becomes volatile.
- These three large-cap stocks are well-positioned to profit from an increased Pentagon budget and geopolitical uncertainty.
The company trades at about 21 times forward earnings, cheaper than many large-cap peers such as L3Harris Technologies Inc. (NYSE: LHX) and RTX Corp. (NYSE: RTX). The dividend yields 2.37%, and Lockheed has raised payouts for 22 straight years; however, the payout ratio of roughly 77% is higher than ideal for a company facing rising materials costs. LMT shares are off to a hot start in 2026, soaring more than 20% in less than three weeks. Technical traders likely noticed a breakout brewing in December, when the price moved above both the 50-day and 200-day simple moving averages (SMAs) and the Moving Average Convergence Divergence (MACD) began to show bullish momentum. Lockheed reports Q4 2025 earnings on January 29, and another quarter with top- and bottom-line beats — like Q3's — could drive shares higher. Boeing: Finally Pulling Its Weight Again in the Duopoly For several years, Boeing Co. (NYSE: BA) was a stock investors watched warily. The company lagged its European rival, Airbus SE (OTC: EADSF), and a series of scandals and management turnover made Boeing largely uninvestable. Reforms appear to be progressing, and Boeing now expects to deliver 52 737 MAX aircraft per month by the end of 2026. Expanding production is crucial to fulfilling its backlog, which now exceeds $600 billion (including $76 billion in the defense segment). Boeing reported narrower-than-expected losses year over year in its Q3 2025 earnings report, and it reports Q4 results next week on January 27. 
Boeing still has a suspended dividend and a shaky cash-flow situation, so investment in BA shares remains partially speculative. Technical signals, however, suggest that earlier bearish warnings may have been premature: a Death Cross in December appears to have been a false alarm, the MACD shows bullish momentum, and a Golden Cross between the 50-day and 200-day SMAs is now imminent. Boeing hasn't made a new all-time high since February 2019 and would need to gain more than 80% from current levels to reach that peak, but the stock has sustained upward momentum for the first time in years. An expanded defense budget should help Boeing move back toward profitability. Leidos Holdings: High-Margin Products for a Modernized Pentagon Leidos Holdings Inc. (NYSE: LDOS) is the value play of the three, despite being a relative newcomer after its spin-off from Science Applications International Corp. (NYSE: SAIC) in 2013. With a market cap near $25 billion, Leidos is smaller than giants like Lockheed or Boeing. It made the list because it sits at the forefront of modern defense technology, using AI to develop cybersecurity and cloud solutions for an increasingly digitized Pentagon. The company won a $455 million contract with the Air Force to provide cloud computing for the Cloud One program, and its cybersecurity and AI-enabled counterterrorism software align with many of the Pentagon's priorities. 
Leidos trades at about 18 times forward earnings and 1.49 times sales — a moderate valuation for a company selling higher-margin products to the Department of Defense. Its chart shows bullish signals despite recent volatility: the stock is back above the 50-day SMA after a two-month bear trap and may be using that level as support again. The Relative Strength Index (RSI) is trending upward and still has room before reaching overbought territory.
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