The warfare now consuming the Middle East has brought an inconvenient economic reality into sharp focus. Whilst hundreds lie dead and destruction spreads across the region, a small circle of corporations is reaping substantial financial gains from the conflict.
To replenish rapidly depleting stockpiles of munitions being used in the wars in Ukraine and the Middle East, major weapons contractors are investing billions in new orders, responding to increased demand and driving up their stock prices. The scale of immediate profit is striking: in the first ten days of hostilities alone, the market values of major US arms makers increased by billions of dollars.
The beneficiaries are familiar names. Lockheed Martin, the world's largest defence contractor, saw its share price rise over 4 per cent to hit near all-time highs, closing at US$676.70 ($960), and has been trading around $650 (roughly $925) over the past week. Lockheed makes the F35 fighter jet, the Terminal High Altitude Area Defence (THAAD) missile defence system and the long-range Precision Strike Missiles (PrSMs), which are being used in the military operation. RTX, which makes the Patriot long-range air and missile defence system and the Tomahawk missile, had its share price rise 4.7 per cent. Northrop Grumman, which makes the B-2 stealth bombers that were used to strike Iranian ballistic missile facilities on the first day of the war, also saw its share price rise by six per cent.
The sheer cost of the conflict fuels this demand. In just the first 100 hours of its military campaign against Iran, the United States is estimated to have spent US$5.2 billion ($7.4 billion) from firing thousands of munitions to operating fighter jets and naval assets, which equals US$1.2 billion ($1.7 billion) a day. The figures, compiled in an analysis by the Center for Strategic and International Studies, demonstrate the staggering cost of the first few days of Operation Epic Fury.
To sustain this spending, defence executives have been summoned to plan expanded production. Executives from Lockheed, RTX, BAE Systems, Boeing, Honeywell Aerospace, L3Harris and Northrop Grumman recently attended a meeting with Trump at the White House, focusing talks on accelerating weapons production, with Lockheed saying in a social media post after the meeting: "We have agreed to quadruple critical munitions production." There are reports that it's likely the Pentagon will ask Congress for another US$50 billion ($71.5 billion) to fund the extra spending required.
The broader context reveals a systemic challenge. Top military contractors have spent more enriching investors than in expanding production. Between 2020 and 2025, top military contractors spent $110 billion on buybacks and dividends more than double what they spent on capital expenditures. This dynamic means that even as defence spending surges, companies prioritise shareholder returns over capacity building.
There is a legitimate counterargument: governments must respond to genuine security threats, and defence manufacturing serves a real purpose. The Israeli military, in particular, faces immediate and sustained threats that require robust weapons systems. The supply of advanced defence capabilities to allied nations is a reasonable expression of strategic interest. A number of polls in the US suggest Americans are not keen on a protracted war with Iran. Yet the democratic public's preference for restraint faces organised resistance. Pentagon contractors have more than a thousand lobbyists on their payroll, and the voices of the American public are being drowned out in Washington DC, with Pentagon contractors having significant influence over the defence spending conversation.
The fiscal reality deserves scrutiny. Public resources that could address pressing needs at home are now flowing into the balance sheets of private corporations. Global defence spending jumped 9.4 per cent in 2024 to $2.7 trillion. One must ask whether this represents wise stewardship of public money or whether political pressure, corporate lobbying, and genuine security concerns have created a system where war becomes profitable in ways that distort decision-making.
For Australia, this story has direct implications. The meeting was attended by the chief executives of RTX (formerly Raytheon), Lockheed Martin, Boeing, Northrop Grumman, BAE Systems, L3Harris Missile Solutions and Honeywell Aerospace, all of which are sitting on billions of dollars of order backlogs. These are precisely the suppliers Australia depends on for its own defence capability. Understanding that defence companies profit from conflict is not an argument against defence spending; it is a reminder that public institutions must maintain vigilant oversight over how such spending occurs and whether it genuinely serves strategic interests or primarily serves corporate balance sheets.