The Pentagon restock of $18.2 billion of missiles! Loma and Thor welcome new catalysts for the military supercycle

The Zhitong Finance App learned that according to a document submitted to the US Congress, the $67 billion emergency financial grant requested by the Pentagon (the US Department of Defense) this fiscal year included $18.2 billion to supplement America's most advanced “Patriot” missile system, Navy “Tomahawk” cruise missiles, and the Army's high-altitude interception system called “Saad.” Of this $67 billion emergency grant application, about $18.2 billion was used to replenish high-end missile reserves. It can be described as a confirmation signal that the global military industry is moving from “geopolitical transactions” to a “supercycle of continuous military inventory replenishment and production expansion fueled by strong demand,” and is setting off a new wave of investment in the defense and military industry chain that has taken the global stock market by storm.

Some media quoted information revealed by people familiar with the matter as reporting that some details of the Pentagon's funding not previously disclosed include: $3.28 billion to purchase three models of the US arms giant Thor Technology (RTX.US) “Standard” series interceptor missiles used by the Navy, and 100 million US dollars to purchase the creator of the F-35 fighter — that is, the US defense supergiant Lockheed Martin (LMT.US), a classified air-to-air weapon called the “Joint Advanced Tactical Missile System” (JATM), which has not yet been officially listed.

The $3.28 billion purchase of RTX's three standard series interceptor bombs and the $100 million purchase of Lockheed Martin JATM air-to-air missiles are, to a certain extent, examples of several specific procurement projects within this $18.2 billion. It is not additional funding tied to $18.2 billion, nor does it mean that the full details have already been listed.

Additionally, Pratt and Whitney (Pratt and Whitney), a subsidiary of RTX Thor Technology, received a US Navy contract amendment worth 1.3 billion US dollars. This contract amendment involves the procurement of spare parts for the F135 propulsion system and the Joint Attack Fighter project.

America's consumption of high-value ammunition such as Patriot (Patriot), THAAD (Saad), and Tomahawk (Tomahawk) in Iran and other war zones has upgraded inventory safety from a budget issue to a combat readiness constraint; at the same time, NATO members are pushing to raise defense and security-related spending to 5% of GDP by 2035, and the total additional defense investment by European allies and Canada from 2025 to 2026 has reached about 258 billion US dollars. The result was not a one-off war order, but rather a “military re-industrialization” cycle where the US, Europe, and Middle Eastern countries simultaneously signed multi-year contracts, prepaid capital to expand production, and rebuild supply chains.

Patriots, Saad, and Tomahawk reshape military valuations, and the global defense and military industry chain enters a military production capacity competition

The total amount of emergency funding requested by the Pentagon this fiscal year was 67 billion US dollars, of which 18.2 billion US dollars were earmarked to replenish stocks of high-tech missiles and interceptor ammunition such as the Patriot, Tomahawk, and Saad. Therefore, about $18.2 billion of this $67 billion emergency grant application was used to replenish stocks of high-end missiles, which can be described as a confirmation sign that the global military industry is moving from “geopolitical transactions” to a “continuous inventory replenishment and production expansion cycle.”

It is true that Lockheed Martin and RTX have the highest degree of direct benefit, but the core benefits are first and foremost rapid attacks on missiles and air defense, rather than traditional fighter machines. Loma has control of key ammunition types such as PAC-3 MSE, THAAD, and the new JATM. Revenue from its missile and fire control business recently increased 20%, and the company's backlog of orders reached about US$234 billion.

The US government also plans to increase the 3-year PAC-3 production capacity from about 600 sheets to 2,000 sheets, and increase THAAD production capacity from 96 to 400 sheets per year. RTX covers Patriot GEM-T, Tomahawk, SM-3, SM-6, and radar and sensors. Its defense backlog has reached US$119 billion, and the company is simultaneously expanding production capacity for Tomahawk, standard series missiles, and Patriot components. The current $1.3 billion F135 spare parts contract is also beneficial to RTX's inclusive and F-35 security chains, but compared to the $18.2 billion missile inventory replenishment, complete fighter aircraft are only secondary beneficiaries.

The second-tier winners are likely suppliers of solid rocket engines, guidance systems, radar sensors, electronic warfare military equipment, artillery ammunition, and critical materials. L3Harris's Aerojet Rocketdyne benefited from increased production of Patriot, THAAD, and other missile propulsion systems; BAE Systems, Northrop Grumman, Hensoldt, Thales, and Leonardo each benefited from guidance, electronic warfare, radar, command control, and battlefield sensing requirements.

Inmetal is also an important beneficiary of the global military supercycle, but its logic favors European land combat equipment, 155 mm shells, propellants, air defense systems, and cruise missiles, rather than the most direct contractor for the current US missile emergency funding. Rheinmetall's second-quarter revenue increased nearly 70% year over year, and the backlog of orders exceeded 80 billion euros, indicating that the expansion cycle of artillery shells and land-based defense was as strong; however, if it was only for this amount of US inventory replenishment, the order sensitivity of Loma and RTX was significantly higher than that of Rheinmetall.

A new round of military investment frenzy is sweeping the world

The Pentagon's emergency military spending of 67 billion US dollars is setting off a new wave of defense and military investment, but not all military stocks will rise indiscriminately. In investment strategies, priority should be given to companies with multi-year contracts, scarce production capacity, adjustable price terms, and clear free cash flow conversion capabilities, rather than chasing all military stocks indiscriminately. Since this year, the stock prices of Lockheed Martin and RTX have both increased by more than 20%, significantly outperforming the S&P 500 index, which has risen 8% since this year.

The best military assets basically have four basic characteristics: they have signed multi-year contracts, have scarce production capacity, the government bears part of the capital expenses to expand production, and orders can be converted into free cash flow. Military investment risks in the stock market mainly stem from US congressional funding delays, overspending on fixed-price contracts, supply chain bottlenecks, and low-cost drones that force the military to find cheaper interception solutions, thereby suppressing long-term demand for high-priced missiles.

According to SIPRI statistics, global military spending actually increased significantly to 2.887 trillion US dollars in 2025, which means an upward trend for 11 consecutive years, with a cumulative increase of 41% over the past ten years; NATO members have promised to invest 5% of GDP in defense and security by 2035, of which at least 3.5% will be spent on core military capabilities. This means that the current military boom is no longer the stimulus of a single war, but rather inventory reconstruction, production line expansion, and recapitalization of the defense industry across budget cycles.

Undoubtedly, the strongest marginal beneficiaries are, above all, anti-aircraft, and accurately guided ammunition, and their upstream industrial chain, rather than simply complete fighter aircraft. Patriot, THAAD, standard series missiles, AMRAAM, battle axes, anti-ship missiles, and long-range rockets all have the characteristics of high consumption, low inventory, and long replenishment cycles. Demand is transmitted along the entire missile guide, radar, solid rocket engine, propellant, combat parts, data chains, and command and control systems. The US has used more than 50,000 rockets, missiles, and rocket-propelled ammunition since 2022 and during the US-Iran war; Lockheed's missile and fire control revenue recently increased by nearly 20%, with backlog orders rising to US$234 billion, and RTX defense backlog of US$119 billion.

As a result, the ammunition, propellant and air defense businesses of Lockheed, RTX, L3Harris/Aerojet, Northrop, BAE Systems, and Rheinmetall generally have higher order flexibility than fighter platforms; fighter manufacturers also benefit, but aircraft delivery cycles are long and consumption attributes are weak, and short- and medium-term performance sensitivity is generally lower than missile and ammunition stockpiles.

The second most growing main line is drones — anti-drones — electronic warfare — ISR — military AI systems, and the third is submarines, shipbuilding, and maritime rejection. Ukraine is promoting joint production of drones with the US and the European Union, and its long-range drone range has exceeded 3,000 kilometers; the EU's “Readiness 2030” clearly prioritizes ammunition, air defense, drones, space services, and military maneuvers; military defense investment in the Indo-Pacific region will continue to focus on mobile launchers, coastal radars, submarines, unmanned surface ships, and anti-ship firepower.