Lockheed Martin just raised its 2026 sales and earnings guidance and reported a record backlog that stretches into the hundreds of billions, which signals how central large contractors have become to long-term spending plans. That kind of visibility can create both opportunity and risk for investors who act too slowly. This article walks through three stocks exposed to this news, explaining where the potential upside and pressure points might sit for each one.
The three stocks covered below are just a starter set, and the full screen on Simply Wall St surfaced 9 more U.S. defense and aerospace contractors with similarly detailed narratives that are not included in this article. If you want to identify potential high-conviction ideas faster, head straight to the U.S. Defense & Aerospace Contractors screener .
ATI (ATI)
Overview:ATI produces high performance titanium, nickel and specialty alloys plus complex metal components used heavily in aerospace and defense platforms.
Operations:ATI generates about US$2.7b from High Performance Materials & Components and US$2.5b from Advanced Alloys & Solutions, with significant U.S. revenue.
Market Cap:US$24.9b
ATI sits in the middle of the defense supply chain, feeding critical materials into airframes, engines and missiles as major contractors signal stronger, longer visibility on programs.
"Recent long-term contract expansions with major airframe customers that include titanium alloy sheet supply, broader product offerings, volume minimums and inflation pass through are still ramping and can continue to support higher price realization, steadier aerospace volumes and a stronger earnings base for ATI as they flow through revenue and EBITDA over time."
What happens to ATI's margin story depends on how one unseen pressure shapes the balance between defense-heavy demand and its capital intensity.
That hidden pressure point is exactly what the full narrative for ATI unpacks, showing where ATI's capital load could be masking a potentially accelerating earnings engine.
Arxis (ARXS)
Overview:Arxis designs and builds electronic and mechanical components that sit inside mission critical defense, space and commercial aerospace systems.
Operations:Arxis generates about US$773 million from Electronic Components and roughly US$997 million from Mechanical Components across mission critical applications.
Market Cap:US$22.5b
Arxis fits into the U.S. Defense & Aerospace Contractors theme as a behind-the-scenes supplier of connectors, bearings, seals and radar absorbing materials that larger primes rely on when programs such as missile interceptors, fighters and space systems ramp. The business now sits in major defense indices, carries strong earnings forecasts and a premium P/S multiple, yet much still hinges on how one funding dependent pressure point evolves.
That funding hinge is exactly why the 3 key rewards and 1 important warning sign could be useful for seeing where Arxis's premium setup might be quietly decoupling from its risk profile.
Astronics (ATRO)
Overview:Astronics designs and builds aircraft power, lighting, safety and test systems for commercial and military aviation and defense electronics.
Operations:Astronics generates about US$863 million from Aerospace and roughly US$79 million from Test Systems, with minor intersegment adjustments.
Market Cap:US$2.6b
Astronics plugs directly into the U.S. Defense & Aerospace Contractors theme because its aircraft power, lighting and test equipment help keep military platforms flying and defense electronics running. This ties any change in long term program spending directly to its order book.
"Record Q2 2026 bookings of $306 million and a consolidated backlog around $780 million provide scope for Astronics to smooth production, run facilities at higher utilization, and potentially translate that volume visibility into more stable earnings and operating margins."
What happens to Astronics' upside now largely turns on whether one concentration in its defense electronics mix quietly reshapes that earnings profile.
If that concentration risk is what you keep circling, read the full narrative for Astronics to see whether Astronics' backlog is masking accelerating or stalled earnings power.
Seeking Alternatives Before Momentum Flies Past
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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