Two years ago, in the waning hours of December 2023, Rocket Lab (RKLB +8.76%) landed its biggest contract ever -- a $515 million award to build 18 missile defense satellites for the U.S. Space Force.
Today, it feels like déjà vu all over again.
Image created by JesterAI.
From $515 million to $816 million in two years flat
On Dec. 19, Rocket Lab won yet another gigantic contract from Space Force -- and once again it's the company's biggest ever -- even bigger than the 2023 contract. For $816 million, Space Force hired the space company to build it 18 more satellites.
That's the headline news. However, allow me to delve a bit into the technical details as I outline the differences between these two mega contracts.
Both of the contracts relate to Space Force's Proliferated Warfighter Space Architecture (PWSA), a system of hundreds of satellites orbiting Earth, designed to (1) track the launch of intercontinental ballistic missiles and then (2) transport data on the launch to command centers in the U.S., which would coordinate America's response.
The 2023 defense contract, dubbed Transport Layer Tranche 2 Beta (TLT2B), hired Rocket Lab to build satellites for the transport, or data relay, part of this network. In contrast, the newly awarded contract is called "Tracking Layer Tranche 3" (TRKT3). And as the name suggests, this time Rocket Lab will be building the more complicated missile tracking satellites, "equipped with advanced missile warning, tracking, and defense sensors to provide global, persistent detection and tracking of emerging missile threats, including hypersonic systems."
Rocket Lab wasn't the only winner. According to media reports, a total of $3.5 billion was awarded, with contracts for 18 satellites going to each of Rocket Lab, Lockheed Martin (LMT +2.77%), Northrop Grumman (NOC +2.71%), and L3Harris (LHX +3.72%). Four times 18 is 72, so each defense contractor received a quarter-share of the total order.
The simple fact that Rocket Lab received a share of the contract, equal to those shares of its much larger, better-known rivals, confirms that Rocket Lab has now won itself a place among the ranks of first-tier space stocks.
One for you, two for me, two for you, four more for me...
And here's something else that will interest Rocket Lab shareholders:
One notable development with TRKT3, vis-à-vis previous tranches of missile tracking satellites (built by other contractors), is that all satellites in this tranche will be equipped not only with wide field-of-view infrared sensors to fulfill the mission, but also "with Rocket Lab's advanced StarLite space protection sensors, designed to safeguard the constellation against directed energy threats." In preceding tranches, only some satellites were equipped with StarLite, a product of the GEOST company that Rocket Lab bought earlier in 2025.
What's more, in addition to just installing StarLite sensors on its own satellites, it turns out that "StarLite sensors have also been adopted by other prime contractors developing TRKT3 satellites." So, on top of its win to build entire satellites as a prime contractor, Rocket Lab investors can also anticipate additional revenue from selling satellite parts to Rocket Lab's PWSA competitors.
How much additional revenue, you ask? Rocket Lab says it could potentially make "approximately $1 billion for supplying items such as payloads, solar solutions, attitude determination and control components, software, and other solutions from our broad portfolio of capabilities."
NASDAQ: RKLB
Key Data Points
What this means for investors
That makes Rocket Lab's total win under PWSA TRKT3 worth potentially closer to $1.8 billion -- which is more than 3 times the total revenue Rocket Lab collected from all its businesses over the last 12 months. Even spread out over the four years between now and when the TRKT3 are due for deployment in 2029, this implies a tremendous boost to Rocket Lab's revenue stream -- roughly 82% of trailing-12-month revenue for each of the next four years.
Is this enough to make Rocket Lab stock a buy?
That remains to be seen. It's worth highlighting, for example, that the relationship between revenue and profits at Rocket Lab's two big divisions, space systems and launch services, reversed in 2025. According to S&P Global Market Intelligence data, such that Rocket Lab now earns a better gross profit margin from launching rockets (36.6%) than from selling satellites and satellite parts (31.4%) -- so Rocket Lab may not get as big a profits boost from this contract as it does a revenue boost.
Still, it's a significant contract, and certainly enough to "move the needle" on Rocket Lab stock, which is, in fact, up 17% since the TRKT3 contract was announced.
Priced near 70 times trailing sales, still unprofitable, and not expected to earn its first profit for another couple of years, Rocket Lab's not an obvious buy today -- but if it keeps winning contracts the size of this one, it could become a buy soon.
