The core thesis is simple. Two weapons systems are being consumed far faster than they can be built. Both are manufactured by a small number of US companies that have already signed long-term production ramp agreements with the Pentagon. A ceasefire does not end the demand: it just shifts it from operational consumption to stockpile replenishment. The contracts exist either way.
What the Depletion Looks Like
Operation Epic Fury, which began February 28, 2026, consumed over 850 Tomahawk cruise missiles in its first four weeks, according to open-source tracking by CSIS and Naval News. That is the largest Tomahawk expenditure in a single campaign in history, and roughly nine times the US Navy's annual procurement rate prior to the current conflict. The US stockpile going into 2026 was estimated at 3,100 to 3,992 missiles. The 850 fired represent somewhere between 21% and 27% of that total, and the conflict is ongoing.
The Patriot situation across Gulf states is arguably more acute. Since the conflict began, Gulf countries collectively used approximately 2,400 PAC-3 and GEM-T interceptors to defend against nearly 1,200 Iranian ballistic missiles and 4,000 Shahed drones, according to Defense Express and Bloomberg. Qatar was projected to run dry within four days; Bahrain has already expended an estimated 87% of its interceptor stocks. For context: Lockheed Martin delivered 620 PAC-3 MSE interceptors in all of 2025, a record year. The Gulf consumed nearly four times that in one conflict.
Why a Ceasefire Does Not End the Trade
This is the point that consensus may be missing. Most investors think about defense stocks in terms of active-conflict momentum, and they assume that a peace deal or ceasefire reverses the thesis. For these specific systems, the math runs the opposite direction.
At peak conflict consumption of roughly 850 Tomahawks per month, the US Navy faces near-depletion in two to three months. At peacetime production of 57 to 90 missiles per year, restoring even a modest reserve takes decades. The new framework agreement RTX signed with the Pentagon in February 2026 targets 1,000 Tomahawks per year, a tenfold increase from recent procurement rates. At 1,000 per year, it takes more than three years just to replace the missiles already fired, assuming zero additional consumption. The inventory deficit is structural, not tactical.
For Patriot, the picture is similar. Lockheed Martin signed a seven-year deal with the Department of War in January 2026 to increase PAC-3 MSE production from 600 units per year to 2,000 units per year. The Army awarded a $9.8 billion contract in September 2025, the largest single missile contract ever, for 1,970 PAC-3 MSE interceptors. Both Gulf allies and Ukraine need replenishment simultaneously, and the US strategic reserve itself was already strained before the current conflict began. A ceasefire stops consumption; it does not rebuild the stockpiles Gulf states have burned through. Those contracts have to be fulfilled regardless.
The Companies
RTX Corporation (NYSE: RTX) is the sole manufacturer of the Tomahawk cruise missile and a major Patriot system producer through its Raytheon segment. The company closed 2025 with $88.6 billion in total revenue and a $268 billion backlog, $107 billion of which is defense. The seven-year Tomahawk ramp agreement spans across administrations and conflict cycles. 2026 guidance is $92 to $93 billion in adjusted sales with $8.25 to $8.75 billion in free cash flow. The stock closed near $192 on April 1, with Wells Fargo initiating coverage that day at an equal weight rating and a $200 target. The consensus average target is approximately $205.
Lockheed Martin (NYSE: LMT, $615.34 as of April 1, market cap approximately $142 billion) has the cleanest single-segment exposure. Its Missiles and Fire Control segment generated $14.45 billion in 2025, representing 19% of total company revenue, and grew 14% year-over-year. Every major US precision strike and interceptor system active in the current conflict runs through this segment: PAC-3, THAAD, JASSM, LRASM, HIMARS, and the PrSM, which saw its first combat deployment during Operation Epic Fury. The company closed 2025 with a $194 billion backlog and guides to approximately 5% revenue growth in 2026 with 25% segment operating profit growth. Consensus price targets are roughly flat to slightly below the current price, which suggests the analyst community is not pricing in a sustained restocking cycle beyond what is already in guidance.
Northrop Grumman (NYSE: NOC, $701.28 as of April 1, market cap approximately $96 billion) earns its place through the supply chain rather than final assembly. Its Defense Systems segment, which represents 18% of revenue, includes the solid rocket motor propulsion that goes into most of the missiles RTX and LMT build. When Tomahawk and PAC-3 production ramp two to four times, NOC's propulsion business scales with them. The company is investing $1 billion to expand solid rocket motor capacity, including tripling tactical SRM output in West Virginia. It guides to $43.5 to $44 billion in 2026 sales and is already up approximately 29% year-to-date.
The Honest Counterweight
The risk worth naming is valuation. All three stocks have appreciated significantly since the conflict began. Consensus price targets for LMT and NOC imply minimal upside from current levels, and the RTX target is only slightly higher than the current price. The easy repricing has happened.
What consensus may not have fully incorporated is duration. The standard analyst model asks whether defense budgets are rising. The more specific question here is whether production capacity for these two specific weapons systems can be rebuilt fast enough to meet the contracted ramp, and whether the contracted ramp already represents a floor on demand for the next seven years. On Tomahawks: 1,000 per year times seven years is 7,000 missiles, at $3.6 million each. That is $25.2 billion of committed production value in one product line alone.
A rapid diplomatic resolution would remove the conflict premium from these stocks, and prices would likely pull back. That is a real and near-term risk. The restocking math, though, does not care about the diplomatic calendar.
This is for informational purposes only and does not constitute investment advice.
