World Ablaze with Endless War, Weapons Companies Reap Profits

The escalation of war between Iran and the United States has heightened global uncertainty. Risks of energy supply disruptions, oil price spikes, and a widening conflict in the Middle East are making market players more cautious. Yet amid these conditions, global defence stocks are showing relatively solid performance. Financial reports for the first half of 2026 show that the majority of major defence contractors in the United States and Europe recorded increases in revenue, strengthened operating profits, and maintained thick contract backlogs. This indicates that geopolitical conflicts are not always directly reflected in short-term net profit. In the defence industry, the impact is typically seen first through new contracts, long-term orders, and rising backlogs. The realisation into revenue and profit occurs gradually, depending on product deliveries, project progress, and government payment schemes.

In the United States, the performance of major defence stocks remains strong. Lockheed Martin posted first-half 2026 revenue of US$38.08 billion, up 5.44 percent year-on-year, while its net profit surged 61.83 percent to US$3.32 billion. RTX also recorded solid growth, with revenue rising 11.69 percent to US$46.78 billion and net profit climbing 31.52 percent to US$4.20 billion. Northrop Grumman, General Dynamics, L3Harris, HII, BWX Technologies, Leonardo DRS, and Curtiss-Wright all booked increases in revenue and profit. Boeing was the exception, still recording a net loss, though the figure narrowed from minus US$643 million in the first half of 2025 to minus US$435 million in the same period of 2026.

In Europe, the rearmament trend is a key catalyst. NATO countries continue to increase military budgets, while the war in Ukraine and the Middle East escalation reinforce demand for air defence systems, missiles, ammunition, combat vehicles, sensors, and military electronic technology. BAE Systems reported first-half sales of US$21.30 billion, up 7.74 percent year-on-year. Airbus posted revenue of US$38.27 billion, a 12.04 percent increase, with net income jumping 47.08 percent to US$2.59 billion. Leonardo and Rheinmetall were particularly striking, with Leonardo’s adjusted net result up 74.36 percent and Rheinmetall’s operating result surging 73.51 percent. Saab also showed strong growth, with revenue up 25.41 percent and net income up 29.26 percent. However, profit readings for European firms require caution, as not all use pure net income; some rely on metrics such as underlying EBIT, operating result, or adjusted net result. Overall, the defence sector continues to enjoy strong tailwinds from geopolitical uncertainty, though the impact is first visible in contracts and backlogs before fully flowing through to net profit.