$800B+ in combined backlogs. NATO rearming to 3.5% GDP. Munitions production surging 7x. Space defense entering its operational era — a generational investment window.
Three converging forces — NATO rearmament, munitions replenishment, and space defense — are creating structural demand growth not seen since the Reagan era.
Core Thesis
We are in a generational defense supercycle driven by NATO rearmament, munitions replenishment, and space defense operationalization. Record backlogs provide multi-year revenue visibility. Production capacity — not demand — is the binding constraint.
The six major primes hold record order books representing 2-3 years of revenue, with book-to-bill ratios above 1.0x confirming the demand wave is still building.
Software-defined defense companies are challenging the traditional industrial base. REPLICATOR, DIU's $979M budget, and CJADC2 are accelerating the shift to autonomous systems.
$979M
DIU FY2026 Budget
The Pentagon is shifting from exquisite platforms to mass-produced autonomous systems. REPLICATOR aims for thousands of unmanned systems. The defense tech IPO wave (Anduril, Shield AI, Saronic) creates new public market entry points in 2026-2027.
The munitions industrial base is undergoing its most dramatic expansion since the Cold War. $28.8B in multi-year procurement signals structural, not cyclical, demand.
Space Force budget surging to ~$40B in FY2026 — a 159% increase from its founding. PWSA and Golden Dome are rewriting the architecture of national defense.
From established primes to pre-IPO disruptors. Filter by conviction tier to explore the full defense stack.
Key milestones from production ramps to IPOs that define the investment window across near, mid, and long-term horizons.
Ten risks that could impair the thesis, from production execution to geopolitical escalation.
Build core positions in the primes with best execution and backlog visibility. Monitor the defense tech IPO wave for entry points. The demand is structural and multi-year — production ramp execution is the key differentiator.
Research compiled February 2026. Not investment advice. See sources below.