Rocket Lab Stock Soars on Defense Spending Surge

Rocket Lab USA is entering the 2026 trading year with significant momentum. The company's flawless operational record from the prior year is now being amplified by investor optimism surrounding anticipated increases in U.S. defense budgets. However, following substantial share price appreciation over the last twelve months, a critical question emerges for investors: how much future growth is already reflected in the current valuation?

The foundation for the recent bullish sentiment is a track record of operational success. The company confirmed it concluded the 2025 fiscal year with a perfect mission record: 21 successful Electron launches and a 100% mission success rate. This solidifies the Electron rocket's status as the most frequently launched small launch vehicle globally.

This reliability is proving crucial as Rocket Lab strategically positions itself within the national security landscape. Its HASTE program (Hypersonic Accelerator Suborbital Test Electron) is increasingly viewed as critical infrastructure for testing in this domain. The catalyst for a recent share price surge, notably an over 8% gain last Friday pushing the stock to approximately $75.58, was a report detailing the Pentagon's intent to invest over $6.9 billion in hypersonic weapons development.

An $816 Million Catalyst for Transformation

A fundamental pillar supporting the current valuation is a major contract award announced in late December. The U.S. Space Development Agency (SDA) selected Rocket Lab to build up to 18 satellites in a deal worth as much as $816 million. This single award effectively doubled the company's order backlog overnight.

Should investors sell immediately? Or is it worth buying Rocket Lab USA?

Market observers interpret this contract as validation of a strategic evolution. Rocket Lab is being re-rated by the market—no longer viewed purely as a launch service provider but as an integrated space systems company capable of capturing significant portions of the broader U.S. space budget.

Navigating Risks: Insider Sales and Development Timelines

Despite the euphoria, several cautionary indicators warrant attention. Analysts point to the development schedule for the new, larger Neutron rocket as a potential risk factor. Any delays in this project, which is essential for competing directly with SpaceX, could pressure the stock's now elevated valuation.

Furthermore, company insiders have been taking profits at record price levels. Director Edward Frank recently sold shares worth nearly $194,000. While such sales are routine after a stock has gained over 200% on a year-to-date basis, they offer investors insight into the sentiment within the executive suite. From a technical perspective, a Relative Strength Index (RSI) reading of 85.1 signals a severely overbought condition.

The Path Ahead

The next significant milestone for investors is March 3, 2026, when Rocket Lab is scheduled to release its quarterly earnings. With the record backlog already public knowledge, market focus will likely shift toward the company's profit margins and the specific development costs, or burn rate, associated with the Neutron program. A sustained technical breakout above the resistance level near $76 could maintain upward momentum in the near term.