Investing.com -- A note from Bernstein analysts on Monday expects a boost for defense stocks following Donald Trump’s election victory, citing historical trends and policy signals that suggest a continuation of strong defence spending.
But, Musk has recently criticised Lockheed Martin’s F-35 fighter jet program, fuelling speculation about potential scrutiny of big-ticket defence projects. Analysts also highlighted the surge in the global demand for U.S. defence equipment, as European nations, grappling with heightened security concerns due to Russia’s invasion of Ukraine, are driving strong export demand for tactical weapons and munitions.
While efficiency initiatives may target key programs like shipbuilding, impacting Huntington and the F-35, impacting Lockheed and Northrop, Bernstein expects Congress to restore funding to these programs, as it did during Trump’s first term. With past underperformance, Bernstein sees reasons for optimism. The combination of rising budgets, strong international demand, and an administration likely to prioritise defence spending provides a favorable outlook for contractors.