News:
According to Bloomberg, the US military is committing nearly its entire stockpile of JASSM-ER cruise missiles to the war with Iran. The stealth weapons are being pulled from bases across the US and Pacific. Of the roughly 2,300 prewar stockpile, just 425 will remain available for use outside the Iran conflict.
Trend:
The US and its allies are facing a growing missile shortage. Years of sustained demand from Ukraine, Red Sea operations, and conflicts with Iran have drained stockpiles, while production struggles to keep up.
Interceptor systems are now central to defending against waves of cheap ballistic warheads and Iranian drones. The US and its allies rely on a layered shield that includes THAAD and Patriot batteries on land, alongside Standard Missiles from sea-based Aegis systems. In the first 16 days of the Iran war, coalition forces fired over 11K munitions, worth roughly $26B.
Stockpile data are closely held, but the strain is clear. A recent assessment by JINSA estimates that the UAE, Kuwait, and Bahrain have already expended more than 75% of their Patriot interceptors. Israel is now rationing its most high-end missiles like the Arrow 3. And Trump has asked Congress for $1.5T in military spending for FY 2027, while the Pentagon has requested an immediate $200B supplement.
Replenishing these stockpiles will take years, not months. Interceptors are complex, high-cost systems with long production cycles. That dynamic creates a clear, multi-year tailwind for defense primes.
The primary beneficiaries are likely to be Lockheed Martin ($LMT) and RTX Corporation ($RTX), which produce Patriot and THAAD, along with Northrop Grumman ($NOC), Boeing ($BA), and L3Harris Technologies ($LHX), which supply key missile components. Israel’s Elbit Systems ($ESLT) is also emerging as a key player, with strong demand for its drone and munitions systems.
Since the war began, defense stocks have lagged the broader market, as much of the geopolitical risk was already priced in. There is also uncertainty around future US spending, especially if Democrats win the midterms.
Still, the demand is unavoidable. Stockpiles are depleted, and rebuilding them will require sustained investment. No government can afford to stay exposed.
In Practice:
The Hedgeye Fourth Turning ETF ($HEFT) is long this trend through Lockheed Martin ($LMT), Northrop Grumman ($NOC), RTX Corporation ($RTX), and Elbit Systems ($ESLT).