SA Sentiment: Defense spending seen rising over the next decade

[Tank Money]
Lanier

Defense spending around the world was already on the rise, totaling $2.63T in 2025, and the ongoing war on Iran is expected to push that number even higher.

The Trump administration is expected to propose a record $1.5T defense budget [https://seekingalpha.com/news/4572397-trump-to-propose-record-1_5t-defense-budget-with-focus-on-missile-shield-ships] for fiscal 2027, higher than the $961.6B requested for fiscal 2026.

As for NATO, tensions are running high, with President Trump renewing his threat of leaving the defense alliance as allies hesitate to join the war on Iran.

The U.S. isolationist pivot is widely expected to push allies to increase defense spending over the next decade, a recent Seeking Alpha poll showed [https://docs.google.com/forms/d/e/1FAIpQLSdhDxWOz1wYKE7LoBIAZ0nGNNS399g5K4yWcDclebSJrF3blg/viewanalytics].

But defense stocks have not gained since the Iran war broke out, with related ETFs down over the past month in line with broader stock market declines: DFEN [https://seekingalpha.com/symbol/DFEN] -27.8%, ITA [https://seekingalpha.com/symbol/ITA] -9.4%, XAR [https://seekingalpha.com/symbol/XAR] -8.7%, PPA [https://seekingalpha.com/symbol/PPA] -6.8%, EUAD [https://seekingalpha.com/symbol/EUAD] -4.7%, SHLD [https://seekingalpha.com/symbol/SHLD] -3.7%.

"If the war is successful in removing Iran as a threat, the need for spending could actually decline in both the U.S. and the Middle East," Bernstein analysts wrote in a recent note. That is unless ground troops are deployed, other countries join the war, or a new threat unfolds, like China potentially invading Taiwan.

But despite the pullback with the overall market, SA subscribers are clearly watching the defense sector, viewing it as a long-term winner [https://docs.google.com/forms/d/e/1FAIpQLSdOthOdsdBYX92BDMpN-AX7dwe7ZORK2TCuyk5g8NrTU5MJTA/viewanalytics]

_Notable defense stocks: _Lockheed Martin (LMT [https://seekingalpha.com/symbol/LMT]), RTX (RTX [https://seekingalpha.com/symbol/RTX]), Northrop Grumman (NOC [https://seekingalpha.com/symbol/NOC]), Boeing (BA [https://seekingalpha.com/symbol/BA]), Honeywell (HON [https://seekingalpha.com/symbol/HON]), General Dynamics (GD [https://seekingalpha.com/symbol/GD]), GEAerospace (GE [https://seekingalpha.com/symbol/GE]), L3Harris Technologies (LHX [https://seekingalpha.com/symbol/LHX]), TransDigm (TDG [https://seekingalpha.com/symbol/TDG]), Huntington Ingalls (HII [https://seekingalpha.com/symbol/HII]).
[Defense spending trends]
U.S. government data

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* War In Iran: Why Europe Could Be The Next Escalation Front [https://seekingalpha.com/article/4886179-war-in-iran-why-europe-could-be-next-escalation-front]
* Trump to propose record $1.5T defense budget with focus on missile shield, ships [https://seekingalpha.com/news/4572397-trump-to-propose-record-1_5t-defense-budget-with-focus-on-missile-shield-ships]
* Cheap drone ‘Lucas’ is said to signal shift in U.S. war strategy [https://seekingalpha.com/news/4571707-cheap-drone-lucas-is-said-to-signal-shift-in-u-s-war-strategy]