Defense Spending Could Lift Guidance Across Lockheed, RTX, GE, and Northrop After Solid Q3

Lockheed Martin, RTX, GE Aerospace, and Northrop Grumman are navigating a renewed era of steady-to-strong defense spending as governments reset budgets to address evolving security threats. In the latest quarterly results, all four companies exceeded consensus estimates and raised full-year targets, signaling that defense orders remain a reliable engine of growth even in an uncertain macro backdrop.

Lockheed Martin indicated it is accelerating production across its divisions to meet what executives described as “unprecedented demand” from U.S. and international customers. The company now projects full-year revenue in the range of $74.25 billion to $74.75 billion and expects earnings per share (EPS) of $22.15 to $22.35. In the third quarter, Lockheed posted EPS of $6.95 on revenue of $18.61 billion, topping estimates of $6.36 and $18.56 billion. Management highlighted ongoing investments in digital systems and physical production capabilities to support high-priority programs, including a broad U.S. defense build-out tied to modernization and capability upgrades.

The architectural centerpiece of Lockheed’s near- to mid-term plans centers on expanding capacity for next-generation platforms and maturing legacy programs, a strategy aimed at sustaining a multi-year cadence of orders. Analysts note that this production ramp is contingent on supply chain resilience and skilled labor availability, but the company’s forward-looking guidance suggests confidence in maintaining a healthy utilization of facilities while meeting accelerating demand. Industry watchers see the trend as indicative of a broader sector trajectory rather than an isolated company phenomenon.

RTX lifts revenue target after tariff impact fades

RTX followed with its own upgrade, moving full-year adjusted EPS guidance from $5.80–$5.95 to $6.10–$6.20 and raising revenue expectations from $84.75–$85.5 billion to $86.5–$87 billion. The stock advanced roughly 9% after the update, underscoring investor relief at the firm’s ability to absorb prior tariff headwinds and maintain momentum across its aerospace and defense portfolios. CEO Chris Calio emphasized the company’s trajectory toward a $251 billion backlog and a broad initiative to scale output across critical programs.

The company’s quarterly results reflect gains across both its aerospace and defense arms, with investments in next-generation technologies and manufacturing footprints cited as key contributors to the upgraded outlook. While some tariff-related pressures had been anticipated in July, RTX’s management noted that those effects have largely been absorbed and that the firm remains on track to deliver substantial top-line growth given demand in both civil and military markets.

GE, Northrop also beat earnings as defense spending climbs

GE Aerospace, which serves both commercial and defense clients, reported Q3 adjusted revenue of $11.31 billion, well above the $10.41 billion consensus. GE Aerospace lifted its full-year revenue growth forecast from the mid-teens to the high-teens and increased free cash flow guidance to roughly $7.1–$7.3 billion. Deliveries of LEAP engines—critical for Boeing’s 737 Max and Airbus A321neo fleets—rose 40% year over year, while defense deliveries surged 83%, highlighting how quickly military orders are ramping up.

Northrop Grumman also exceeded profit expectations, delivering EPS of $7.67 for the quarter versus a $6.46 consensus. Revenue rose modestly, but the defense systems division led growth with a double-digit rise, pushing total sales higher and reinforcing the group’s stance on sustained program execution. The company nudged its 2025 EPS guidance higher by 65 cents, now projecting $25.65 to $26.05, with CEO Kathy Warden attributing the upgrade to faster response times and improved output across programs.

Across the quartet—Lockheed, RTX, GE Aerospace, and Northrop Grumman—the pattern is consistent: higher orders, expanded backlogs, stronger production, and upgraded guidance. The defense sector’s strength appears tied to a more resolute policy stance toward modernization and deterrence, alongside a broad-based push to ensure supply chain resilience and on-time program delivery. The result is a sector-wide upgrade cycle that seems less volatile than other areas of the market and more closely aligned with long-term government spending trajectories.

The defense budget picture for 2025 remains a central driver. The administration has requested a defense budget of $849.8 billion for 2025, up from $842 billion in 2024 and well above the $742 billion level seen in 2022. Authorities cited ongoing security threats from multiple fronts and the need to sustain modernization across air, land, sea, cyber, and space domains as justification for the larger outlays. The implications for the sector are clear: a steady stream of manufacturing demand, robust backlog replenishment, and the continued ability of major primes to translate orders into earnings power.

Industry observers note that defense spending has become one of the few durable growth drivers this year, even as tariffs, inflation, and geopolitical volatility create mixed conditions elsewhere. The trajectory for the next 12–18 months will hinge on how well contractors can sustain productivity gains, navigate supply chain shifts, and manage program risk across multi-year programs. In this environment, the defense sector’s earnings resilience is a core theme for investors seeking exposure to a sector with relatively predictable demand tied to policy decisions and national security imperatives.

Defense continues to account for a growing share of the revenues for these four leaders, reflecting a shift toward higher-value, long-cycle programs. As Washington continues to chart modernization priorities and new capabilities, the balance of risk and opportunity favors producers with demonstrated execution capability, strong cash flow, and the ability to scale production to meet a rising cadence of orders. In the near term, investors should monitor order intake, backlog evolution, and the trajectory of guidance revisions as a gauge of the sector’s momentum into 2025 and beyond.

Authorities cited in the public narrative include the U.S. administration’s defense budget request and programmatic priorities, the companies’ quarterly earnings releases, and industry analyses by market observers who emphasize the durability of government demand in a volatile global environment. While specifics will evolve, the throughline remains clear: defense spending, program execution, and manufacturing scale are shaping earnings trajectories in the sector.

Frequently Asked Questions

What factors drive the defense sector’s earnings growth in 2025?

Defense sector earnings 2025 are being propelled by sustained government budgets, rapid production ramp-ups, and expanding backlogs across major programs. In the latest quarter, all four leading contractors exceeded expectations and raised full-year targets, underscoring a durable demand environment and the ability to translate orders into earnings growth.

How might investors interpret the latest earnings reports from major defense primes?

Investors should focus on backlog levels, order momentum, and guidance revisions. A continued rise in government spending, combined with steady production rates on key platforms, suggests a constructive trajectory for earnings and cash flow through 2025 and into next year, even as external risks persist.

Key Takeaways

• Backlog strength underpins guidance: The four major contractors maintain elevated production plans supported by growing orders and long-term programs.
• Defense budgets remain a core driver: The 2025 defense budget request reinforces a favorable demand backdrop for aerospace and defense suppliers.
• Q3 beats & 2025 upgrades: Strong third-quarter results across the cohort translate into higher EPS and revenue forecasts, signaling ongoing sector tailwinds.

Conclusion

The defense sector is demonstrating resilience through a combination of expanding backlogs, rising production, and upgraded guidance across Lockheed Martin, RTX, GE Aerospace, and Northrop Grumman. With the 2025 defense budget on an upward trajectory and ongoing modernization programs, the sector appears positioned for continued earnings power, trading breadth, and strategic importance within a volatile macro landscape.

Sources: Lockheed Martin Q3 earnings release; RTX Q3 earnings release; GE Aerospace Q3 results; Northrop Grumman Q3 results; 2025 defense budget request from the U.S. administration.