F-35 cuts hit Lockheed, yet stock jumps – is Iran the reason?
The shares of Lockheed Martin, the world’s largest defense contractor, surged 2.77% to $469.27 on Friday, shrugging off recent Pentagon cuts to its flagship F-35 program, as a documented Israeli airstrike on Iran’s nuclear and military facilities fueled investor confidence in heightened demand for advanced military hardware.
The attack, which involved Israeli F-16 and F-35 fighter jets targeting key sites like the Natanz uranium enrichment facility, killed senior Iranian military commanders and nuclear scientists, escalating tensions in the Middle East and spotlighting Lockheed’s critical role in supplying cutting-edge aircraft to U.S. allies.
The Israeli operation, dubbed “Rising Lion,” unfolded in the early hours of Friday, with warplanes striking dozens of targets across Iran, including nuclear infrastructure and ballistic missile factories, according to Israeli Prime Minister Benjamin Netanyahu. Iranian state media reported the deaths of Major General Hossein Salami, head of the Islamic Revolutionary Guard Corps, and Mohammad Bagheri, Iran’s second-highest military commander, alongside nuclear scientists critical to Tehran’s atomic ambitions.
Iran’s Supreme Leader Ayatollah Ali Khamenei vowed a “severe punishment,” and Tehran launched over 100 drones in retaliation, raising fears of a broader regional conflict. The United States, while not involved in the strikes, was briefed in advance, with Secretary of State Marco Rubio emphasizing that the operation was a unilateral Israeli action.
With a unit cost ranging from $82 million to $110 million depending on the variant, the jet is designed for air superiority, ground attack, and intelligence, surveillance, and reconnaissance missions. Its advanced sensor fusion, stealth capabilities, and network-enabled operations make it a cornerstone of modern air forces, including Israel’s, which operates 50 F-35s with plans to acquire 25 more.
The Israeli Air Force’s reliance on the F-35, alongside its fleet of over 230 F-16 Fighting Falcons, underscores Lockheed’s dominance in the global fighter jet market. The F-16, a multirole fighter first introduced in 1978, remains a workhorse for 24 nations, with over 4,500 units built and a unit cost of approximately $63 million for the latest Block 70/72 variant.
Its agility, affordability, and adaptability have kept it relevant, complementing the F-35’s stealth-driven missions. In Friday’s strikes, Israeli F-35s reportedly conducted precision attacks on fortified nuclear sites, while F-16s targeted missile production facilities, showcasing the complementary roles of Lockheed’s aircraft in high-stakes operations.
The International Atomic Energy Agency confirmed damage to the Natanz facility, located 225 kilometers south of Tehran, though the extent remains unclear. Iranian media reported civilian casualties, including children in a residential area of the capital, intensifying global calls for de-escalation.
Lockheed Martin’s stock performance on Friday mirrored a broader rally in defense stocks, with Raytheon Technologies and Boeing gaining 1.8% and 2.1%, respectively. Investors often flock to defense contractors during geopolitical crises, anticipating increased orders for weapons systems.
The F-35’s global footprint, with 14 nations operating or ordering over 1,000 units, mitigates some of the impact of U.S. cuts. Israel, a key operator, has leveraged the jet’s stealth capabilities in previous missions against Iranian-backed targets in Syria and Lebanon.
The aircraft’s advanced radar-evading technology and ability to share real-time data with ground and naval forces make it ideal for penetrating heavily defended airspace, as likely occurred in Iran. The jet’s three variants—F-35A for conventional takeoff, F-35B for short takeoff and vertical landing, and F-35C for carrier operations—offer unmatched versatility, though critics cite its high maintenance costs and software glitches as persistent challenges.
In contrast, Iran’s air force relies on aging U.S.-made F-4 Phantoms and F-14 Tomcats from the pre-1979 era, alongside Russian-supplied MiG-29s and Su-24s. These platforms lack the stealth and sensor capabilities of Lockheed’s jets, leaving Iran vulnerable to Israel’s technological edge.
Historically, Lockheed Martin has weathered geopolitical and budgetary turbulence. During the 1980s, its F-16 sales soared amid Cold War tensions, while the F-117 Nighthawk’s stealth technology revolutionized warfare in the 1991 Gulf War. The F-35 program, launched in 2001, has faced scrutiny for cost overruns, with the Government Accountability Office estimating a $1.7 trillion lifetime cost.
Yet, its unmatched capabilities have secured contracts from allies like Japan, Australia, and NATO members, bolstering Lockheed’s $173 billion backlog. The company’s 2023 free cash flow of $5.3 billion and 2.62% dividend yield continue to attract investors seeking stability in volatile markets.
Friday’s market reaction also reflects broader economic ripples from the Israel-Iran conflict. Brent crude oil prices jumped 9% to $78 per barrel, signaling fears of supply disruptions in the Middle East, which produces a third of global oil. The energy spike could pressure inflation, complicating the Federal Reserve’s monetary policy outlook. Meanwhile, gold prices hit a three-month high as investors sought safe-haven assets, underscoring the uncertainty gripping global markets.
The strikes have drawn mixed international reactions. Saudi Arabia condemned the attack, citing risks to regional stability, while Hamas and Palestinian Islamic Jihad expressed solidarity with Iran. The United Nations Security Council scheduled an emergency meeting, with Iran’s foreign ministry accusing the U.S. of complicity as Israel’s primary arms supplier.
Rubio’s statement clarified that no U.S. forces participated, though President Trump’s National Security Council convened to assess the situation, reflecting Washington’s delicate balancing act between supporting Israel and avoiding direct involvement.
The company’s Bethesda, Maryland, headquarters declined to comment on the stock surge, referring inquiries to its latest investor presentation, which projects 4-5% sales growth in 2025, driven by international demand.
The Pentagon’s F-35 cuts, reported on Tuesday, stem from budget reallocations to emerging threats, including hypersonic weapons and cyber warfare. The Air Force’s request for 24 jets, down from an expected 48, reflects a shift toward next-generation platforms like the Next Generation Air Dominance [NGAD] program, where Lockheed is a leading contender.
Despite the reduction, the F-35 remains critical to U.S. and allied forces, with 990 jets delivered globally by 2024. The program’s international partners, including the UK and Canada, have reaffirmed commitments, offsetting domestic slowdowns.
Iran’s state media reported children among the dead in Tehran, though independent verification remains pending. Such reports could fuel debates over U.S. foreign policy and defense exports, potentially impacting Lockheed’s public image.
The market’s optimism about Lockheed Martin contrasts with earlier setbacks. In February, posts on X speculated that Trump had paused F-35 deliveries to Belgium to prioritize Ukraine’s F-16 needs, contributing to an 11% stock drop. While unconfirmed, the rumor highlighted the company’s vulnerability to political decisions.
Similarly, a March report suggested Portugal, Canada, and Poland had canceled or paused F-35 contracts, though Lockheed later clarified that discussions were ongoing. These incidents underscore the complex interplay of geopolitics, defense spending, and investor sentiment.
Conversely, a diplomatic breakthrough in U.S.-Iran talks, however unlikely, could temper demand for offensive systems. The company’s next earnings report, due July 29, 2025, will provide clues to its financial health amid these uncertainties.
The surge in Lockheed Martin’s shares, sparked by Israel’s audacious strike on Iran, reveals a paradox: even as domestic orders waver, global crises reinforce the company’s indispensability. The F-35 and F-16, battle-tested in one of the world’s most volatile regions, embody Lockheed’s technological prowess and strategic importance.
Yet, as the Middle East teeters on the brink, questions linger. Will escalating tensions cement defense stocks as a safe bet, or will the human cost of conflict cast a shadow over the industry’s gains? For now, investors are betting on the former, but the stakes extend far beyond Wall Street.
Bulgarian Military