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ETFs like ITA, XAR and PPA offer diversified exposure to the defense sector's strong outlook
Geopolitical tensions have been a significant headwind for financial markets in 2026, with the conflict in the Middle East fueling uncertainty and volatility. Yet, the same backdrop has created a favorable environment for the defense sector, supported by expectations of higher military spending.
With military exchanges between Washington and Tehran becoming more intense, the risk of a broader regional conflict has increased. The concerns of a wider regional war have been reinforced after President Trump stated that a decision on launching a "massive attack" on Iran is imminent, as the Middle East conflict spread to the Red Sea, as quoted on CNBC.
The defense sector remains well-positioned in the current environment, as it has historically outperformed during periods of heightened geopolitical tensions and increased military activity. At the same time, President Trump has urged defense contractors to expand manufacturing capacity and increase weapons production.
The industry's outlook has been further strengthened by policy support. The U.S. House of Representatives advanced the fiscal 2027 National Defense Authorization Act (NDAA), authorizing a record $1.15 trillion in military spending, as per Reuters.
Adding to the positive backdrop, several defense companies delivered robust second-quarter 2026 earnings.
Earnings in Focus
Below, we have discussed in brief the second-quarter results of a few renowned U.S. Aerospace – Defense industry players.
Lockheed Martin
Lockheed Martin (LMT - Free Report) reported second-quarter 2026 adjusted earnings of $7.94 per share, which beat the Zacks Consensus Estimate of $7.22 by 10%. The bottom line increased 8.9% from the year-ago quarter's reported figure of $7.29.
Net sales were $20.06 billion, which beat the Zacks Consensus Estimate of $19.34 billion by 3.7%. The top line inched up 10.5% from $18.16 billion reported in the year-ago quarter. The year-over-year improvement was driven by higher sales growth registered by LMT’s business segments.
LMT’s backlog, as of June 28, 2026, was $230.42 billion compared with $193.62 billion as of Dec. 31, 2025. The Aeronautics segment accounted for $54.36 billion of the total backlog amount, while the Missiles and Fire Control segment contributed $87.88 billion. The Rotary and Mission Systems segment contributed $48.45 billion, while the Space unit accounted for $39.72 billion.
The company has a Momentum Score of A. LMT came up with second-quarter 2026 earnings on July 23, before market open and gained around 10.54% on the same day.
RTX Corporation
RTX Corporation’s (RTX - Free Report) second-quarter 2026 adjusted earnings per share (EPS) of $1.89 beat the Zacks Consensus Estimate of $1.66 by 13.9%. The bottom line improved 21.1% from the year-ago quarter’s level of $1.56.
Revenues rose 14.5% year over year to $24.71 billion and beat the consensus mark of $22.83 billion by 8.2%. Growth was supported by higher commercial aftermarket and defense demand. Organic sales advanced 16% in the quarter.
Backlog climbed 22% to $289 billion. The company secured $43 billion of new awards during the quarter, including nearly $20 billion at Raytheon. The total backlog comprised $170 billion of commercial orders and $119 billion of defense orders, providing strong visibility into future production requirements.
RTX has a Zacks Rank #2 (Buy) with a VGM Score of C. The company released second-quarter 2026 earnings on July 23, before market open and gained around 7.3% on the same day.
Northrop Grumman
Northrop Grumman (NOC - Free Report) reported second-quarter 2026 adjusted earnings of $7.68 per share, which beat the Zacks Consensus Estimate of $6.84 by 12.3%. The bottom line, however, declined 5.8% from the year-ago quarter’s level of $8.15.
NOC’s total sales of $10.88 billion in the second quarter beat the Zacks Consensus Estimate of $10.80 billion by 0.7%. The top line also improved 5.1% from $10.35 billion reported in the year-ago quarter. Total operating income during the quarter was $1.10 billion, reflecting a significant decrease from $1.43 billion in the prior-year quarter.
The company’s total backlog was $95.68 billion at the end of the second quarter compared with $95.61 billion at the end of first-quarter 2026.
The company has a Momentum Score of A. NOC came up with second-quarter 2026 earnings on July 21, before market open and has since gained around 10%.
Defense ETFs to Consider
For investors looking to bet on second-quarter results as well as the continued surge in military spending, the following Defense ETFs provide a great opportunity.
Investors can consider iShares U.S. Aerospace & Defense ETF (ITA - Free Report) , Invesco Aerospace & Defense ETF (PPA - Free Report) , SPDR S&P Aerospace & Defense ETF (XAR - Free Report) , Global X Defense Tech ETF (SHLD - Free Report) , First Trust IndxxAerospace & Defense ETF (MISL - Free Report) and U.S. Global Technology and Aerospace & Defense ETF (WAR - Free Report) .
View the Zacks #1 Rank List
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Defense ETFs in Focus Amid Earnings, Conflict and Military Spending
Key Takeaways
Geopolitical tensions have been a significant headwind for financial markets in 2026, with the conflict in the Middle East fueling uncertainty and volatility. Yet, the same backdrop has created a favorable environment for the defense sector, supported by expectations of higher military spending.
With military exchanges between Washington and Tehran becoming more intense, the risk of a broader regional conflict has increased. The concerns of a wider regional war have been reinforced after President Trump stated that a decision on launching a "massive attack" on Iran is imminent, as the Middle East conflict spread to the Red Sea, as quoted on CNBC.
The defense sector remains well-positioned in the current environment, as it has historically outperformed during periods of heightened geopolitical tensions and increased military activity. At the same time, President Trump has urged defense contractors to expand manufacturing capacity and increase weapons production.
The industry's outlook has been further strengthened by policy support. The U.S. House of Representatives advanced the fiscal 2027 National Defense Authorization Act (NDAA), authorizing a record $1.15 trillion in military spending, as per Reuters.
Adding to the positive backdrop, several defense companies delivered robust second-quarter 2026 earnings.
Earnings in Focus
Below, we have discussed in brief the second-quarter results of a few renowned U.S. Aerospace – Defense industry players.
Lockheed Martin
Lockheed Martin (LMT - Free Report) reported second-quarter 2026 adjusted earnings of $7.94 per share, which beat the Zacks Consensus Estimate of $7.22 by 10%. The bottom line increased 8.9% from the year-ago quarter's reported figure of $7.29.
Net sales were $20.06 billion, which beat the Zacks Consensus Estimate of $19.34 billion by 3.7%. The top line inched up 10.5% from $18.16 billion reported in the year-ago quarter. The year-over-year improvement was driven by higher sales growth registered by LMT’s business segments.
LMT’s backlog, as of June 28, 2026, was $230.42 billion compared with $193.62 billion as of Dec. 31, 2025. The Aeronautics segment accounted for $54.36 billion of the total backlog amount, while the Missiles and Fire Control segment contributed $87.88 billion. The Rotary and Mission Systems segment contributed $48.45 billion, while the Space unit accounted for $39.72 billion.
The company has a Momentum Score of A. LMT came up with second-quarter 2026 earnings on July 23, before market open and gained around 10.54% on the same day.
RTX Corporation
RTX Corporation’s (RTX - Free Report) second-quarter 2026 adjusted earnings per share (EPS) of $1.89 beat the Zacks Consensus Estimate of $1.66 by 13.9%. The bottom line improved 21.1% from the year-ago quarter’s level of $1.56.
Revenues rose 14.5% year over year to $24.71 billion and beat the consensus mark of $22.83 billion by 8.2%. Growth was supported by higher commercial aftermarket and defense demand. Organic sales advanced 16% in the quarter.
Backlog climbed 22% to $289 billion. The company secured $43 billion of new awards during the quarter, including nearly $20 billion at Raytheon. The total backlog comprised $170 billion of commercial orders and $119 billion of defense orders, providing strong visibility into future production requirements.
RTX has a Zacks Rank #2 (Buy) with a VGM Score of C. The company released second-quarter 2026 earnings on July 23, before market open and gained around 7.3% on the same day.
Northrop Grumman
Northrop Grumman (NOC - Free Report) reported second-quarter 2026 adjusted earnings of $7.68 per share, which beat the Zacks Consensus Estimate of $6.84 by 12.3%. The bottom line, however, declined 5.8% from the year-ago quarter’s level of $8.15.
NOC’s total sales of $10.88 billion in the second quarter beat the Zacks Consensus Estimate of $10.80 billion by 0.7%. The top line also improved 5.1% from $10.35 billion reported in the year-ago quarter. Total operating income during the quarter was $1.10 billion, reflecting a significant decrease from $1.43 billion in the prior-year quarter.
The company’s total backlog was $95.68 billion at the end of the second quarter compared with $95.61 billion at the end of first-quarter 2026.
The company has a Momentum Score of A. NOC came up with second-quarter 2026 earnings on July 21, before market open and has since gained around 10%.
Defense ETFs to Consider
For investors looking to bet on second-quarter results as well as the continued surge in military spending, the following Defense ETFs provide a great opportunity.
Investors can consider iShares U.S. Aerospace & Defense ETF (ITA - Free Report) , Invesco Aerospace & Defense ETF (PPA - Free Report) , SPDR S&P Aerospace & Defense ETF (XAR - Free Report) , Global X Defense Tech ETF (SHLD - Free Report) , First Trust Indxx Aerospace & Defense ETF (MISL - Free Report) and U.S. Global Technology and Aerospace & Defense ETF (WAR - Free Report) .