Tomahawk Missile Production Is Surging—and These Stocks Could Benefit

Coming into Monday trading, RTX stock was up about 45% over the past 12 months, despite trailing the S&P 500 by about three percentage points since fighting broke out in Iran. (Krisztian Bocsi/Bloomberg)

Key Points

• RTX announced a seven-year, $22.9 billion contract to manufacture Tomahawk cruise missiles for the U.S. Navy.
• The procurement contract aims to boost Tomahawk production to about 1,000 per year, up roughly 10-fold compared with recent levels.
• Investors worry that U.S. defense spending could slow if Democrats retake the House in the 2026 midterm elections.

The U.S. stockpile of missiles and the American military-industrial complex’s ability to produce more missiles have been concerns since the U.S. began shooting down myriad Iranian drones costing tens of thousands of dollars with weapons costing millions.

The changing nature of warfare— with autonomous, low-cost technologies proliferating —and rising geopolitical tensions have necessitated changes at the Defense Department, which continues to prod the industry to boost missile production capacity.

The latest example came Monday, when RTX announced a seven-year $22.9 billion contract to manufacture Tomahawk cruise missiles for the U.S. Navy.

One of the goals of the new procurement contract is to boost Tomahawk production to about 1,000 per year, up roughly 10-fold compared with recent levels.

“Tomahawk is the Navy’s most important strike weapon, able to target hostile forces hundreds of miles away without ever risking the lives of our sailors,” said Raytheon President Phil Jasper in a news release. “We are making significant investments in our workforce, technology, supply chain and facilities to dramatically boost production capacity and meet surging demand.”

Exactly how many missiles, Tomahawks or others, can be produced annually is a moving target that, frankly, investors didn’t think much about until recently.

Tomahawk production is going to more than 1,000 per year. Patriot and THAAD (Terminal High Altitude Area Defense) interceptor production is set to roughly quadruple from roughly 700 per year.

Air-to-air and precision strike missile production is set to rise dramatically as well.

RTX makes the Tomahawk missiles. The new contract helps the company, but the entire industry benefits from growing production. L3Harris Technologies supplies RTX with rocket motors, while General Dynamics supplies warheads.

Lockheed Martin and RTX make Patriot and THAAD missiles and systems, with other companies, including Boeing and Honeywell Aerospace, supplying parts and electronics.

RTX stock was up 0.5% in early trading on Monday, while the S&P 500 was down 0.2%. The iShares Aerospace & Defense ETF was also down 0.2%.

Defense stocks haven’t gotten as big a boost as some might expect from higher expected production. Coming into Monday trading, the ETF was up about 4%, trailing the S&P 500 by about nine percentage points, since fighting broke out in Iran. Shares of rocket motor supplier L3Harris were down about 20%, while Lockheed shares were down 8%.

One issue worrying investors is politics. They worry that U.S. defense spending could slow if Democrats retake the House in the 2026 midterm elections. Still, defense spending is typically a bipartisan issue, and missile production is likely to rise no matter who controls Congress.

Write to Al Root at allen.root@dowjones.com

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