Global military spending hit a record $2.7 trillion during 2024. The U.S. alone makes up about half of that figure with its 2026 budget coming in at $1.48 trillion, up about half a trillion dollars from 2025.
But perhaps the biggest surprise in 2025 was Germany boosting its defense spending to become the fourth-largest spender on the planet behind the U.S., China, and Russia.
Indeed, Germany spent 86 billion euros on modernizing its military in 2025. And in the 2026 budget passed by the Bundestag in November 2025, that number swelled 25% to 108 billion euros. The goal is to eventually hit 152 billion euros in defense spending by 2029.
So, if you would like to profit from the American and German defense spending boom there are two companies you ought to consider this month.
Image source: Getty Images.
The arsenal of democracy
Lockheed Martin (LMT +0.56%) has been producing some of the finest military hardware for the U.S. and NATO since 1994. Today it makes equipment for every theater of combat: land, sea, air, space, and cyberspace.
Helicopters, jets, transport planes, ammunition, missile launch systems, radar, ship-mounted weapons, and now satellite systems, you name it. If you need some defensive hardware, Lockheed Martin has you covered.
And America's defense spending in 2025 saw the company's sales for that year grow 6% to $75 billion. Earnings per share declined slightly for the year, but the company grew its net cash position 66% to $4.12 billion and saw its operating cash flow surge 214% to $3.22 billion.
Lockheed's net margin is sitting at 6.69% and I expect an influx of spending from the U.S. military's even larger 2026 budget will see Lockheed's revenues and profit margins increase significantly.
NYSE: LMT
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Europe's sleeping giant
In many ways, Rheinmetall (RNMBY +1.11%) is Germany's own Lockheed Martin. Founded in 1889 as an artillery manufacturer, today Rheinmetall produces tanks, artillery, light armored vehicles, ammunition, ships, and, with a new 40-60 joint-venture with ICEYE on Sept. 23, 2025 it also produces satellites and other space-warfare systems.
Perhaps Rheinmetall's best-known product is the main gun of the Leopard 2 tank, which is one of the most widely used main battle tanks in the world.
And, Rheinmetall has been a major benefactor of the German military's new budget and subsequent shopping spree.
In Rheinmetall's most recently reported results (Q3 2025), the company saw its sales grow 13% to 2.78 billion euros, its operating margin grow to 12.9%, its backlog grow 23% to 63.8 billion euros, and its net income surge 24.8%.
Broken down by segment, sales for the company's vehicles were up 8%, weapons and ammunition were up 38%, and electronic solutions grew 32%. The only dip came from Rheinmetall's power systems segment and it was only down 3%.
The company expected record nominations for Q4 including for its Jackal, Puma, and Lynx IFVs, the Leopard 2 tank, trucks, and artillery ammunition. And Rheinmetall's existing backlog has it confident it will be able to meet its full-year guidance for 2025 of 35%-40% sales growth and an operating margin of 15.5%.
OTC: RNMBY
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The U.S. is currently the biggest defense spender out there, but Germany's defense budget is one of the fastest growing. If you're looking to profit from increased defense spending globally, companies arming both the U.S. and Germany are looking very good this year.
