“Defense Contractors NEED War” - Trump Pushes $1.5T Military Budget
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What is the Pentagon's $1.5 trillion defense budget proposal?
The Pentagon comes out and asks for a 42% year-over-year hike in their budget with a $1.5 trillion defense budget that they're asking for 2026. And this is a barren story. Let me read this to you, and then... We can go there, Rob. So eight big winners from Trump's historic $1.5 trillion defense request. And Tom, I'm going to come to you. Rob, is that about this or no?
Yes, it's Kevin Hassett.
All right. So on Friday, Trump unveiled the fiscal's 2027 budget of $1.5 trillion. The $1.5 trillion number will be at 42%. And it's a historic increase not seen since the Korean War when the annual defense budget jumped from $14 billion in 1950 to $33 billion in 1951, almost $48 billion in 1952. The Navy is projected to see its ship budget more than double 65.8 billion versus 27.2, wrote vertical research partner analyst Bob Stellar, also seen a big jump in the Space Force. Its request of 71.2 billion represents 77% year-over-year increase. That is relatively good news for shipbuilders, general dynamics, and Huntington Ingalls Industries, and for space startups, including Rocket Lab, Firefly, Aerospace, and, of course, privately held SpaceX companies.
Huntington stock gains 2.8% on Monday.
How do defense contractors benefit from increased military spending?
General Dynamics stock rose 0.7%. Rocket Lab stock went up 0.1%. And Firefly shares went up 5.8%. The Defense Department is also asking for 85 F-35 jets from Lockheed Martin up from 47 in fiscal year 2026. The Army gets an increase in the Armored Multipurpose Vehicle, or AMPV, made by Britain's BAE. And last but not least, both of those stocks, L3 Harris Technologies and RTX have gained more than 65% over the last 12 months, leaving them trading for about 26 estimated 2026 earnings. Tom, your thoughts on this.
So there's two things going on in here. One is forward and the other is replenish.
What historical context is provided for the defense budget increase?
On the forward side, they're taking the things that have worked. The F-35 is working. We've just seen it work. And so they're like, we need more of what works. And some of those F-35s are going to find their way to Saudis. Some of them are going to find their way to Israel. There's a variety of places where we are going to have those and use them. And that's almost doubling the 47s. That from the previous. Then there's replenish. We have been every year that the defense budget, you know, you buy bombs, you buy missiles, you don't use them. You buy surface to air, SAM, surface to air missiles. You buy air to air combat, you know, all of the. the things that are out there. And now guess what? We've been using them up.
So there is a big, big, we got to, you know, we just had everybody over to grandma's house. We stayed there a week and we had Thanksgiving. And as we leave, we need to make a Costco trip because we got to refill grandma's pantry. because we've eaten everything in our pantry so we got to replenish all the bombs and stock and missiles and things that we've used up number one number two uh they're we're buying a bunch of stuff that that works and number three we're discovering just how valuable space force is and so we are radically increasing what's been spent on that and lastly War is really good for business if you're a defense contractor. The sad thing about war is the soulless, faceless defense contractors see it as a testbed, and they see it—they want war.
They want border skirmishes.
Which military branches are seeing significant budget increases?
They want aircraft engagement with North Korea and China to just kind of test each other a little bit up there in the skies over the— Sea of Japan. They want that. And this gives them an ability to test things. And so this is the price tag. This is the price tag of forward armament. This is a price tag of adding space force. This is also the price tag of refilling the pantry because we just used up all of our bombs.
Colin.
Yeah, I mean... It seems like a big number. I mean, in totality.
Do you support it? Do you think this is a good thing we're doing to get tighter and get more fighters? I don't know.
I mean, I'm not privy to, you know, the crazy thing to me, these numbers are so big. I mean, where does $1.5 trillion even go?
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Chapters
6 chapters
1
What is the Pentagon's $1.5 trillion defense budget proposal?
0:00–1:24
2
How do defense contractors benefit from increased military spending?
1:24–2:08
3
What historical context is provided for the defense budget increase?
2:08–3:42
4
Which military branches are seeing significant budget increases?
3:42–6:24
5
How does the F-35 program impact defense spending?
6:24–11:50
6
What is the relationship between war and the defense industry?
11:50–14:58
Speakers
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