Defense Backlogs Provide Long-Term Stability Amid Geopolitical Volatility

While immediate defense demand has spiked due to the 2026 conflict in Iran, several mid-tier contractors are finding stability in structural, multiyear programs. Textron (TXT), Huntington Ingalls (HII), and Rocket Lab (RKLB) have seen significant share price appreciation this year, driven by backlogs that extend well into the next decade. These companies are positioned to benefit from long-cycle modernization efforts that are largely independent of specific regional engagements. For these firms, the primary growth driver is the replacement of aging military infrastructure and the adoption of next-generation platforms. Textron reported 2025 revenue of $14.8 billion and expects 2026 revenue to reach $15.5 billion. Its $18.8 billion backlog is heavily weighted toward the U.S. Army's MV-75 program, specifically the Bell V-280 Valor tiltrotor aircraft intended to replace the Black Hawk fleet through the 2030s. The company also benefits from commercial aviation refreshes via its Cessna and Beechcraft brands. Huntington Ingalls, the largest U.S. shipbuilder, maintains a massive $53.1 billion backlog—more than five times its 2025 annual revenue of $12.5 billion. The company is focused on the Ford-class aircraft carriers and Virginia- and Columbia-class submarines, which involve construction cycles of seven to ten years. The combination of high-barrier-to-entry naval construction and aviation modernization suggests a bullish long-term outlook for these contractors. With Huntington Ingalls targeting a 15% increase in shipbuilding throughput for 2026, the focus remains on converting these massive backlogs into realized revenue.