Lockheed Martin (NYSE: LMT) is set to report earnings today — and as with many defense contractors these days, the results should be strong.
After all, U.S. defense spending is set to eclipse $1 trillion in the next year hitting a whole new milestone.
Europe has drastically increased its defense outlays in response to Russia’s invasion of Ukraine and President Trump’s insistence.
The Middle East is still a hotbed of conflict, as Israel is warring with several of its neighbors.
And China continues to build out its military capabilities, from its navy to its nuclear arsenal, with the goal of reclaiming Taiwan and potentially other territories in the Pacific.
As a result, global military spending surged 9.4% in 2024, to $2.72 trillion, according to Stockholm International Peace Research Institute (SIPRI).
That’s the highest figure ever recorded and the biggest increase since 1988 (the year before the Berlin Wall fell).
Obviously, as the world’s largest defense contractor, Lockheed Martin stands to benefit from all of this.
Its first-quarter earnings certainly reflected that.
Net income rose 10% in the first three months of the year to $1.71 billion, or $7.28 per share, handily topping the Wall Street consensus of $6.34 per share.
And total revenue — which totaled $17.96 billion — expanded in every division outside of space.
Two segments in particular drove that growth: missile systems and fighter jets.
Crucially, the F-35 program has regained some traction following a few costly delays. That’s key because it makes up roughly 30% of the company’s total revenue.
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Lockheed delivered 47 F-35 jets in the first quarter of 2025, which was a little ahead of the guided pace. It delivered 72 through April. And the company expects to deliver as many as 190 aircraft this year.
More than 1,200 F-35s have already been delivered to the United States and 12 other allied partners.
Indeed, despite the headaches, the F-35 is still the most capable fighter on the planet. International demand for the jet is incredibly high.
And things could get even more interesting if Lockheed Martin makes the fighter jet fully autonomous, as CEO Jim Taiclet recently suggested.
"We're thinking of the F-35 not just as a stand-alone aircraft, but how it can interface with sixth generation and with unmanned aircraft and itself be optionally manned," Taicelt said.
According to the CEO, F-35s with "optional" pilot capability could be available within a "relatively modest time frame."
This is something we’ve been expecting for a few years now, as the military works to build out a broadly connected, AI-enabled fleet of unmanned weapons platforms across air, land, and sea.
The Air Force has already been testing an AI-guided F-16 fighter jet with full-scale dogfights against human opponents.
And another program — Collaborative Combat Aircraft (CCA) — would pair manned fighters with drone wingmen.
It’s no surprise then that Lockheed Martin is also launching an “AI Fight Club” to test out new AI algorithms.
The club will invite any willing company to enter AI models in a no-holds-barred battle royale — a head-to-head competition between some of Silicon Valley’s brightest minds across every conceivable domain.
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“We’re going to be inviting anybody who wants to get their AI up against the government environment with our native test and evaluation setup to determine how well their systems are performing,” says John Clark, Lockheed’s senior vice president of technology and strategic innovation.
Lockheed Martin will provide the controlled environment, guaranteeing the sanctity of intellectual property. (After all, the first rule of fight club is that you don’t talk about it.) However, participants will have the opportunity to present and publish their research and results.
And that’s not all.
A crowd of government representatives will be granted access to observe and engage with participants. This will give AI startups that prove their mettle a chance to horn in on lucrative government contracts.
They might also find themselves in business with the world’s largest defense contractor.
And finally, it’s inevitable that Lockheed Martin will come to play a part in President Trump’s Golden Dome initiative.
The Golden Dome is set to be the biggest Pentagon program since the Manhattan Project.
Trump’s budget has earmarked $25 billion as a “down payment” for the missile shield, which will operate across all spectrums and have to defend against modern threats like hypersonic missiles and drone swarms.
Trump himself claims the full cost of the Golden Dome will be just $175 billion — but, frankly, there’s no way that’s accurate.
The Congressional Budget Office puts the total sum 4–5 times higher, at $542 billion.
Of course, that’s not likely to show up in Lockheed Martin’s earnings today.
Still, the company is expected to report a 2.5% increase in second-quarter revenue in the neighborhood of $18.6 billion and adjusted earnings of $6.52 per share.
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