When U.S. and Israeli forces confirmed strikes on Iran this weekend, the playbook wrote itself: buy defense stocks on Monday morning, sell them once the headlines fade. It is a pattern as old as the ticker tape. But this time, the real story is not about bombs. It is about maintenance contracts.
The defense industry is undergoing a structural shift that most investors are missing. Modern weapons systems are not one-time purchases — they are platforms that require decades of software updates, spare parts, logistics support, and system integration. According to the U.S. Government Accountability Office, operating and support costs account for roughly 70% of a major weapons system’s total lifetime cost. That means for every dollar spent buying an F-35, the government will spend roughly $2.30 keeping it flying over the next 30 years.
The backlog numbers tell the story. Lockheed Martin reported a $194 billion backlog at the end of 2025. RTX Corporation sits on $268 billion. Northrop Grumman stands at $95.7 billion. These are not speculative order books — they are locked-in, multi-year revenue streams that look a lot more like enterprise software contracts than traditional manufacturing sales.
Meanwhile, the market just gave these stocks a gift. When Iran nuclear talks showed progress earlier this week, defense names sold off hard: Lockheed fell 4%, L3Harris dropped 5.8%, Northrop declined 5%, and RTX lost 3%. Then the strikes happened. The whiplash creates opportunity for investors who understand the underlying economics rather than just trading the headlines.
Add companies like Palantir Technologies to the mix — operating in the defense software layer with multi-year government contracts tied to data analytics and AI-driven military systems — and you see an industry building recurring revenue streams that would make any SaaS CEO jealous. Wars end. Geopolitical tensions ebb and flow. But once a fighter jet is deployed, the maintenance checks never stop coming.
The broader market picture matters too. Oil jumped to $67.29 WTI and $72.64 Brent. Gold hit $5,296 after an 11% February surge — the strongest monthly gain since 2012. Bitcoin dropped below $64,000. Classic risk-off positioning. If this conflict escalates further, especially near the Strait of Hormuz, expect defense names to outperform while the rest of the market squirms. But even if tensions cool tomorrow, those backlogs are not going anywhere.