Company Overview Lockheed Martin secured one of the defense industry’s largest contracts of 2025 on Monday, September 30th, when the Pentagon awarded the company $12.5 billion for F-35 Lots 18 and 19, covering production and delivery of 296 fifth-generation stealth fighters. This definitizes the final agreement for both lots, bringing the combined value to $24.3 billion when combined with December 2024’s initial $11.8 billion authorization. The Bethesda-based defense giant remains the world’s largest pure-play defense contractor with the F-35 representing its most critical program.
What makes Lockheed particularly compelling right now is the convergence of multiple catalysts supporting long-term revenue visibility. The fiscal 2026 National Defense Authorization Act calls for $924.7 billion in U.S. military spending, with significant additional funding coming from the One Big Beautiful Bill Act’s $156.2 billion defense modernization allocation available through September 2029. Lockheed’s $167 billion backlog at Q2 2025, combined with accelerating international F-35 orders from Germany, Finland, Singapore, and renewed U.S. commitment, positions the company for stable growth despite recent program charges that pressured Q2 earnings.
Key Technical and Fundamental Drivers
Fresh F-35 Contract → $12.5B Finalized Monday The September 30th contract definitizes 148 Lot 18 jets and adds scope for 148 Lot 19 fighters, with deliveries beginning in 2026 and work completing in August 2028 for U.S., FMS, and partner nations.
Massive Backlog → $167B Total Contracts Lockheed’s Q2 2025 backlog of $167 billion provides multi-year revenue visibility, with management expecting significant additional awards in H2 2025 including PAC-3 missile production contracts.
F-35 Program Scale → 1,230 Aircraft in Service With over 1 million flight hours logged and 12 nations currently operating F-35s, the program has achieved combat-proven status with consistent international expansion driving long-term production commitments.
Defense Budget Tailwinds → $1.08B+ Total Spending The combination of the base $924.7 billion FY2026 defense budget plus $156.2 billion in OBBB modernization funding creates unprecedented support for programs like F-35, PAC-3, and THAAD systems.
Dividend Stability → 2.7% Yield Lockheed maintains steady dividend payments supported by government contract stability, offering income alongside defense sector exposure during elevated geopolitical tensions.
Market Takeaway Lockheed Martin represents the quintessential defense investment thesis – long-term government contracts providing predictable revenue streams backed by bipartisan support for military readiness. Monday’s $12.5 billion F-35 contract finalization demonstrates the Pentagon’s commitment to maintaining air superiority through the premier fifth-generation fighter platform. While the stock has underperformed some defense peers year-to-date, trading around $487, this creates a potential entry point for investors seeking stability in uncertain markets.
The key consideration is Lockheed’s heavy concentration in defense (75% of revenue from DoD) compared to more diversified contractors like Raytheon and General Dynamics. This focus becomes an advantage during periods of elevated defense spending but creates vulnerability if budget priorities shift. However, with ongoing conflicts in Ukraine and Middle East tensions driving NATO commitments to spend 5% of GDP on defense by 2035, the macro environment strongly favors defense contractors. The F-35’s role as the cornerstone of U.S. and allied air power – with 296 more jets now contracted and Germany, Finland, and Singapore expanding their orders – provides decades of production visibility.
The September 30th contract timing is significant, coming at fiscal year-end when the Pentagon locks in major procurement decisions. Combined with Lockheed’s $167 billion backlog and management’s guidance for additional major awards in H2 2025, the company has extraordinary revenue visibility through 2028. While Q2 2025 saw $1.6 billion in program charges that pressured earnings, management maintained full-year guidance of $73.75-74.75 billion in sales and $6.6-6.8 billion in free cash flow. For investors seeking defensive positioning with 2.7% dividend yield and exposure to multi-decade defense modernization trends, Lockheed offers compelling value at current levels.