What If You Invested in Defense Stocks When the Iran Conflict Started?
On February 28, 2026, the U.S. and Israel launched joint strikes on Iran targeting nuclear sites, missile infrastructure, and IRGC command structures. Defense stocks surged immediately - and they haven't looked back.
Defense Stocks vs. the S&P 500 in 2026
The S&P 500 is down roughly 2% year-to-date. The S&P Aerospace & Defense Index is up over 13%. That's a 15+ point gap in less than three months.
| Stock | YTD Return | Key System |
|---|---|---|
| Lockheed Martin (LMT) | ~+40% | THAAD missile defense |
| RTX Corporation (RTX) | Best performer | Patriot radar systems |
| Northrop Grumman (NOC) | ~+60% (3yr) | B-2 Stealth Bomber |
| AeroVironment (AVAV) | Volatile | Switchblade drones |
On the first trading day after the strikes (March 2), defense stocks surged to record highs. Northrop Grumman jumped 6% in a single session. RTX rose 4.7%. Lockheed Martin gained 3.4%.
Why Defense Stocks Keep Climbing
The $1.01 trillion defense budget. President Trump proposed the first-ever trillion-dollar defense budget for fiscal year 2026 - a 13% increase. The base defense request is $892.6 billion, plus $119.3 billion in additional spending.
Active combat driving procurement. Lockheed signed a deal with the Pentagon in January to quadruple THAAD interceptor production from 96 to 400 per year. RTX's Patriot systems are being used across the conflict. Northrop's B-2 bombers were deployed in the initial strikes.
A proposed FY2027 budget near $1.5 trillion. The Iran conflict has made defense spending less politically controversial and more urgent.
The AeroVironment Wild Card
On March 2, AVAV initially surged over 20% in pre-market on the Iran news. Their Switchblade loitering munitions - small drones that cost $70,000-$100,000 and can destroy a $2 million missile launcher - were seen as exactly the kind of weapon a prolonged conflict would demand.
Then the Pentagon announced it was reopening bidding on the $1.4 billion SCAR satellite communications contract. The stock reversed and finished down nearly 20%. One contract setback erased months of conflict-driven gains. That's the risk with smaller defense names.
What $10,000 Would Be Worth
If you invested $10,000 on January 1, 2026:
| Investment | Value Today |
|---|---|
| Lockheed Martin (LMT) | ~$14,000 |
| RTX Corporation (RTX) | ~$14,500+ |
| S&P 500 (SPY) | ~$9,800 |
The Bottom Line
Defense stocks have massively outperformed the market in 2026, driven by the Iran conflict, record defense budgets, and active procurement. The S&P 500 is down. Defense is up double digits.
Try the calculator to see what your investment in Lockheed Martin, RTX, or Northrop Grumman would be worth today. Or browse all industrial & defense stocks.