Wrapping up Q1 earnings, we look at the numbers and key takeaways for the defense contractors stocks, including Lockheed Martin (NYSE: LMT) and its peers.

Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds.

The 13 defense contractors stocks we track reported a very strong Q1. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was 2.3% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 8.5% since the latest earnings results.

Weakest Q1: Lockheed Martin (NYSE: LMT)

Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.

Lockheed Martin reported revenues of $18.02 billion, flat year on year. This print fell short of analysts’ expectations by 0.9%. Overall, it was a softer quarter for the company with a significant miss of analysts’ adjusted operating income and EPS estimates.

"Lockheed Martin's superior capabilities in delivering advanced defense technology and systems and in space exploration have been proven again and again in 2026. Our Orion spacecraft safely carried the crew farther from Earth than ever before during NASA's historic Artemis II mission, concluding with a precisely executed re-entry and splashdown. Our superior fifth generation fighter jets, the F-35 and F-22, continue to operate with great effectiveness in contested and difficult missions. Additionally, our layered missile defense architecture, including phased array radars, Aegis integrated command and control system, and the THAAD and advanced Patriot Missile interceptors, protected both military assets and civilians," said Lockheed Martin Chairman, President and CEO Jim Taiclet.

Lockheed Martin delivered the weakest performance against analyst estimates and weakest full-year guidance update of the whole group. The market seems disappointed with the results as the stock is down 8.8% since reporting and currently trades at $506.43.

Read our full report on Lockheed Martin here, it’s free.

Best Q1: Mercury Systems (NASDAQ: MRCY)

Founded in 1981, Mercury Systems (NASDAQ: MRCY) specializes in providing processing subsystems and components for primarily defense applications.

Mercury Systems reported revenues of $235.8 million, up 11.5% year on year, outperforming analysts’ expectations by 14.2%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.

Mercury Systems achieved the biggest analyst estimate beat among its peers. The market seems happy with the results as the stock is up 27.2% since reporting. It currently trades at $105.50.

Is now the time to buy Mercury Systems? Access our full analysis of the earnings results here, it’s free.

Northrop Grumman (NYSE: NOC)

Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE: NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.

Northrop Grumman reported revenues of $9.88 billion, up 4.4% year on year, exceeding analysts’ expectations by 1.2%. Still, it was a mixed quarter as it posted a miss of analysts’ adjusted operating income estimates.

As expected, the stock is down 23.6% since the results and currently trades at $502.08.

Read our full analysis of Northrop Grumman’s results here.

Kratos (NASDAQ: KTOS)

Established with a commitment to supporting national security, Kratos (NASDAQ: KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.

Kratos reported revenues of $371 million, up 22.6% year on year. This number surpassed analysts’ expectations by 8.1%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.

The stock is down 24.6% since reporting and currently trades at $46.40.

Read our full, actionable report on Kratos here, it’s free.

Huntington Ingalls (NYSE: HII)

Building Nimitz-class aircraft carriers used in active service, Huntington Ingalls (NYSE: HII) develops marine vessels and their mission systems and maintenance services.

Huntington Ingalls reported revenues of $3.10 billion, up 13.4% year on year. This print topped analysts’ expectations by 2.6%. It was a very strong quarter as it also recorded a solid beat of analysts’ adjusted operating income and EPS estimates.

The stock is down 24% since reporting and currently trades at $276.00.

Read our full, actionable report on Huntington Ingalls here, it’s free.

Market Update

Late in 2025 into early 2026, there was hand-wringing around artificial intelligence. For software companies, the fear was that AI would erode pricing power and compress margins as new tools made it easier to replicate what once required expensive enterprise platforms. Crypto investors had their own version of the same anxiety: if AI agents could trade, allocate capital, and manage wallets autonomously, what exactly was the long-term value of today’s crypto infrastructure?

These concerns triggered a noticeable rotation away from these sectors and into safer havens. But markets rarely dwell on one narrative for long. Spring 2026 came, and the focus shifted abruptly from technological disruption to geopolitical risk. The US’ conflict with Iran became the dominant driver of market psychology, and when geopolitics takes center stage, the script changes quickly. Investors stop debating growth rates and start worrying about oil supply, inflation, and global stability.

Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.