Lockheed Martin Shares Surge on Proposed Defense Spending Boom

A dramatic shift in investor sentiment unfolded over a 24-hour period for defense giant Lockheed Martin. While threats of capital restrictions weighed heavily on the stock Wednesday, a colossal budget proposal from the White House has now ignited a wave of optimism, propelling the aerospace and defense sector forward.

The stock's sharp pre-market advance on Thursday is supported by two key developments. First, Lockheed Martin confirmed a landmark seven-year framework agreement with the U.S. Department of War aimed at "transforming procurement." The deal targets a more than threefold increase in the annual production rate of PAC-3 MSE interceptor missiles, scaling output from the current 600 units to 2,000.

This long-term agreement represents a structural shift in government munitions procurement, providing Lockheed Martin with the planning certainty it has long sought to justify capital investments in manufacturing capacity. Market observers view this contract as a potential blueprint for future deals covering major systems like the F-35 jet or hypersonic weapons.

The second, and primary, driver is a stark political pivot. President Trump, via social media, unveiled plans for a "dream military" and floated a budget of $1.5 trillion for the 2027 fiscal year. This figure surpasses previous market expectations of $1 trillion by a significant 50 percent.

Should investors sell immediately? Or is it worth buying Lockheed?

Investor Fears Over Capital Allocation Subside

For shareholders, the proposed budget delivers crucial relief. Just a day earlier, Lockheed Martin's stock closed down at $496.87, pressured by a U.S. government proposal to ban dividends and share buybacks for contractors failing to increase production rates. The prospect of massive state spending has abruptly shifted market sentiment from regulatory fear to growth anticipation.

In pre-market trading, the stock climbed back toward the $535 level, potentially exceeding its previous 52-week high of $522.04. In response to the dual developments, research firms including Zacks Research have begun revising their earnings per share (EPS) estimates upward for 2026 and 2027.

Upcoming Earnings to Provide Fundamental Check

Whether the political euphoria translates into fundamental financial strength will soon become clearer. While the $1.5 trillion budget proposal must still navigate Congressional approval, investor focus is now turning to concrete business performance. Lockheed Martin is scheduled to release its fourth quarter and full-year 2025 results on Thursday, January 29, 2026.