The government of Saudi Arabia has announced that it will spend $142 billion on U.S. defense equipment, news that is a potential boon to American contractors such as Lockheed Martin (LMT), Northrop Grumman (NOC), and General Dynamics (GD).
Confident Investing Starts Here:
- Quickly and easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks straight to you inbox with TipRanks' Smart Value Newsletter
The defense sales are part of a larger $600 billion investment that the Saudi government has agreed to make in U.S. companies and the American economy. In announcing the investment, Saudi Arabia said it will purchase “state-of-the-art warfighting equipment and services from over a dozen U.S. defense firms.”
That commitment of $142 billion is nearly double Saudi Arabia’s 2025 defense budget, which totaled $78 billion. Neither the Saudi government or the White House said when the defense deal is expected to conclude or when the money is likely to be spent.
Big Spending
The commitment amounts to a windfall for U.S. defense contractors big and small. In addition to the big players such as Lockheed Martin and Northrop Grumman, other American defense companies could also benefit, including RTX Corp. (RTX), Howmet Aerospace (HWM), and Boeing Co. (BA).
Analysts were quick to say that the Saudis will likely spend the $142 billion on equipment for air force and space capabilities, as well as missile defense, border security, and enhanced communication systems. Despite the good news, defense stocks were generally down on May 13 as investors rotate back into mega-cap technology names.
Is LMT Stock a Buy?
The stock of Lockheed Martin has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on seven Buy and eight Hold recommendations issued in the last three months. The average LMT price target of $521.07 implies 12.74% upside from current levels.
