The rising geopolitical tensions and a failing rules-based order created the perfect storm that radically reshaped global defence priorities.
Against this backdrop, several defence businesses have come into the spotlight for their best-in-class equipment, analytical tools, and platforms.
We check out if some of them might be a good fit for investors’ portfolios.
RTX Corporation (NYSE: RTX) – Protection Against a Failing Rules-Based Order
Amid geopolitical tensions, RTX is emerging as a dependable defensive play against a failing rules-based order with robust fundamentals.
In the fourth quarter of 2025 (4Q2025), revenue grew 12% year on year (YoY) to US$24.2 billion, driving adjusted net income 2% higher to US$2.1 billion, thanks to broad-based growth across all segments.
RTX also increased its 4Q2025 dividend by 7.9% to US$0.68 from a year ago.
Notably, Raytheon is the segment performing the heavy lifting in RTX’s future revenue runway.
For the whole of 2025, Raytheon contributed US$40 billion of new backlog that included its Patriot “land and air” defence system and other tactical munitions, bringing the full-year backlog to a staggering US$75 billion.
This boost isn’t just a one-off.
Management expects defence budgets in the Middle East to grow by 3% to 4% annually over the next five years
To meet this demand, the global defence conglomerate has already ramped up production for key programmes such as the Patriot system’s GEM-T by 20% in 2025.
In such an uncertain world, RTX’s offerings that enable countries to protect themselves are poised to be the most reliable compounders.
Lockheed Martin (NYSE: LMT) – Locking in the Defence Tailwind
Being a top-tier defence contractor, Lockheed’s a direct beneficiary of today’s “unprecedented demand” for high-tech defences.
Lockheed’s equipment, such as the F-35 fighter jets and RQ-170 Sentinel stealth drones, made decisive contributions to the success of Operation Absolute Resolve in Venezuela.
The company boasts compelling financial numbers, with revenue from the Missiles and Fire Control segment surging 18% to US$4.0 billion in 4Q2025, fuelled by a global scramble for sophisticated air defence and missile systems.
These demand surges contributed significantly to Lockheed’s revenue growth of 6% to US$75 billion for the whole of 2025.
Importantly, Lockheed’s free cash flow was up 31% to US$6.9 billion.
To keep up with demand, the defence contractor tripled its production capacity for PAC-3 interceptors to support US forces and allies in the current increasingly unsettled environment.
With an eye-watering backlog of US$194 billion at the end of 2025, which is roughly 2.5 times its annual revenue, Lockheed has clear revenue visibility.
This steady momentum likely provided management the confidence to increase Lockheed’s 4Q2025 dividend per share by 4.5% YoY to US$3.45.
Palantir Technologies (NASDAQ: PLTR) – Mission Impact Over Unproven Science Projects
The rising demand for Palantir’s battle-proven intelligence and battlefield operations software is evident in its adoption in Middle Eastern countries like Israel and the Arab states.
Specifically, Maven, Palantir’s premium defence AI platform, is experiencing all-time-high usage and is supporting “simultaneous real-world events” across combatant commands.
In 4Q2025), Palantir’s total revenue jumped 70% YoY to US$1.41 billion.
The US government was a significant contributor, as its associated revenue surged 66% to US$570 million in the same period.
With an adjusted operating margin of 57%, Palantir boasted a remarkable “Rule of 40” score of 127% in 4Q2025.
Crucially, Palantir’s offerings are not meant just for experiments.
Instead, Palantir is focused on real “mission impact”, and this has driven the company’s remarkable financial performance.
Palantir’s “weapon software” is reportedly utilised in every combat situation the company is aware of, fundamentally shaping how adversaries view US deterrence.
When the stakes are high, national security demands require software that “actually works” – a niche that Palantir has carved out for itself.
Get Smart: Positioning Your Portfolio for a More Volatile World
The rise in defence spending appears structural, as countries increasingly prioritise national budgets towards national security amid a weakening global rules-based order.
RTX and Lockheed offer long-term revenue visibility through their massive backlogs and pay dividends.
Meanwhile, Palantir’s fiercely pragmatic approach to maximising mission impact through AI-powered software is increasingly game-changing and indispensable, offering high-growth opportunities for investors.
While investors have no control over geopolitical escalations, it helps to consider positioning themselves for a more volatile world.
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Disclosure: Larry L owns shares of Palantir.
