Defense Stocks Buoyed by $11.1 Billion U.S. Arms Package for Taiwan
The potential sale puts major contractors like Lockheed Martin and RTX in the spotlight amid simmering U.S.-China tensions over the island’s sovereignty.
Shares in major U.S. defense contractors are in focus after the U.S. State Department approved a potential $11.1 billion arms sale to Taiwan, a move that underscores the escalating strategic competition between Washington and Beijing.
The proposed package, which includes advanced missile systems, artillery, and drones, provides a significant potential revenue stream for prime contractors in the Aerospace & Defense sector, including Lockheed Martin (LMT), RTX Corp. (RTX), and Boeing (BA).
The Defense Security Cooperation Agency (DSCA) confirmed it notified Congress of the potential sale, which is now subject to a 30-day review. According to the official notification, the eight-part deal includes High Mobility Artillery Rocket Systems (HIMARS), M109A7 self-propelled howitzers, and various anti-tank missiles. The sale is intended to help Taiwan modernize its armed forces and maintain a credible self-defense capability.
The announcement comes on the heels of a smaller $330 million sale of aircraft parts in November and represents one of the largest single U.S. weapons packages for Taiwan. The news was met with predictable condemnation from Beijing, which views such sales as a violation of its “one-China principle” and an infringement on its sovereignty, as reported by regional media.
Investor sentiment for the defense sector has been firm, driven by elevated global conflicts and increased national defense budgets. Lockheed Martin, with a market capitalization of over $111 billion, has seen its stock trade near the upper end of its 52-week range. The company had already signaled strong demand for its hardware, raising its full-year revenue and profit forecast in October, citing a robust order pipeline linked to geopolitical instability.
RTX, a $241 billion giant known for its missile systems and advanced electronics, is also positioned to be a key supplier. While some of its existing delivery schedules to Taiwan have faced delays, the new package represents a significant long-term opportunity. Wall Street analysts maintain a consensus target price of over $194 for RTX shares.
While these large-scale government contracts offer long-term revenue visibility for the contractors, the fulfillment process often spans several years. The sustained geopolitical tension, however, provides a structural tailwind for the entire sector, keeping order books full and reinforcing the strategic importance of the U.S. defense industrial base.