The Pentagon wants more Lockheed Martin (LMT) F-35 fighter jets. In fact, its proposed 2027 budget includes 85 jets, up from the 47 requested last year. Breaking that down, the Air Force would receive 38 F-35A jets, the Marine Corps would get 10 F-35B jets, and the Navy would receive 37 F-35C carrier-based jets. Interestingly, this increase is part of a much larger defense budget that has been proposed by President Donald Trump, which totals about $1.5 trillion. For investors who want exposure to defense contractors, including LMT stock, consider the following defense ETFs:
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- Invesco Aerospace & Defense ETF (PPA)
- iShares U.S. Aerospace & Defense ETF (ITA)
- SPDR S&P Aerospace & Defense ETF (XAR)
Importantly, the plan includes a $1.15 trillion base budget, along with another $350 billion that’s expected to be approved through a separate reconciliation bill. Only 32 of the F-35 jets would be funded through the base budget, while the rest would come from that additional funding. Overall, this plan would raise national security spending by about 42% compared to last year and increase defense spending to roughly 4.5% of GDP, up from about 3.2%.
The budget also boosts spending in other key areas. For example, it includes about $260 billion for procurement and $220 billion for research and development, both of which are higher than last year. In addition, a major focus is the “Golden Dome” missile defense system, which aims to build a defense network using advanced technologies, including space-based systems. The plan sets aside $17.5 billion for research on this project, with most of the funding coming from the reconciliation bill.
Which Defense ETF Is the Better Buy?
Turning to Wall Street, out of the three ETFs mentioned above, analysts think that XAR has the most room to run. In fact, XAR’s price target of $331.66 per share implies 27.8% upside potential.
