5 Defense and Energy Stocks Poised to Surge Amid Rising Tensions Between Iran and Israel in 2025
- giuliapedrinivisio
- Jul 1
- 5 min read
Author: Lorenzo Filotei
Tensions Between Iran and Israel
The beginning of the tensions between Iran and Israel was motivated by a real fear of the Israeli government. Indeed, Iran is identified as an actual nuclear threat. Based on this situation, Netanyahu ordered a military action against the nuclear sites and scientists who could elaborate the “Atomic bomb formula”.
As daily life is influenced by the war (in terms of deaths and destruction), the same happens to global markets, which live through a period of serious uncertainty. However, among the most affected sectors, there are the defensive and energetic industries that may gain from this extremely volatile period.
Established the context, let’s have a look at the 5 energy and defense stocks with a big potential for growth over this period.
Lockheed Martin (LMT) – Defense Manufacturing Giant
This company is one of the biggest players in the defense and aeronautical field. Its market cap is over $110 billion. The four main segments in which this company is specialized are: aeronautics, missiles and fire control, rotary and mission systems, and space.
The beginning of a war would correspond to an increase in revenues for this kind of player. Indeed, a strong footprint of revenues is given by the air and missile defense systems production. Therefore, since 2022, its revenues have grown steadily, driven in part by the Russia-Ukraine conflict.
In its first 2025 quarter, Lockheed Martin reported a general increase in sales by 4%. Moreover, have been secured several contracts for Precision Strike Missiles, THAAD, JASSM/LRASM, and the Trident II D5 Life Extension, amounting to up to $10 billion of future work.
Management's Perspective: Jim Taiclet, Lockheed Martin's Chairman, President, and CEO, commented, "The momentum we created last year continued into the first quarter of 2025, with sales growing 4% year-over-year and free cash flow generation of $955 million. These solid first quarter results reinforce confidence in our ability to achieve the full year 2025 financial guidance we laid out in January, demonstrating the resilience and adaptability of Lockheed Martin’s franchises amidst a highly dynamic geopolitical and technical environment." (Tradingview.com).
Northrop Grumman (NOC) – Strategic Intelligence & Defense Tech
The NOC is a giant in the defense technology and global cybersecurity sectors, characterized by a market cap of $70 billion. It provides systems and leading technologies to local governments, including the US Navy, Air Force, international agencies placed in Europe, the Middle East, and Asia-Pacific.. Among the products are unmanned systems, aircraft, cybersecurity, command, control, communications, intelligence, surveillance, and reconnaissance (C4ISR).
This company is not just a defense contractor. It’s a fundamental element of US geopolitical power projection. Indeed, NOC has strong relations with NATO countries, Japan, and Australia. It’s a weight that balances powers in special situations like NATO and Russia or the Middle East conflict.
The US government represents the main contractor that adopts its services and products. Therefore, its revenues are undoubtedly connected to increases or decreases in defense budgets from the US government. So, if during war times governments increase their defense budget, they ask for more in terms of quantity and efficiency, enticing the company to innovate their services.
Chevron (CVX) – Energy Security Play
During war times, global oil supply disruptions happen as geopolitical tensions begin to rise. For instance, a blockage of the Strait of Hormuz may lead to a significant increase in oil prices due to the limited availability in the market.
One of the main companies that operates as an oil supplier is Chevron. Its global expansion, in terms of production and distribution, allowed it to reach more than 180 countries (from the USA to the Middle East). This strong global presence gives CVX, beyond revenues, risks, and constant volatility of market conditions.
What if an oil price spike happens? Based on the fact that there is a highly correlated relation between oil prices and CVX performances, and given the geopolitical context, experts forecast a price rise.
Motley Fool exposed, saying that if the price per barrel remains around 60$/bar, Chevron might generate $9B of free cash flow by the end of 2026.
FXStreet showed that each increase in the WTI by 2.6% produced an increase of 1.8% of CVX’s stock in a single day. That demonstrates how much fluctuations characterise this market field.
Palantir Technologies (PLTR) – Data & Cyber Warfare
In modern warfare, it’s becoming more and more important to deploy and innovate intelligence platforms and data analytics, such as Palantir’s MetaConstellation. This tool allows for to coordination and automation of target detection by satellite utilization. Palantir has signed several contracts with the US government. Among them, the most relevant are:
In 2021, the USA assigned Palantir a contract worth $823M to implement the “Gotham platform” (DGCS-A program) supporting the global management of the intelligence.
In 2024, the US Defense Department expanded the contract “Maven Smart System” to more than $1B, thanks to the increase in demand for military commands and AI tools.
Another contract was established with the US Army. It reached $250M (2023-2026) for research and experimentation using AI and machine learning for US military actions.
The beginning of these geopolitical tensions pushed the governments to finance their defense budget. Among them, there is the US Defense Department that is closing more and more contracts with high-tech companies such as OpenAI, Meta, and Palantir. This ascending trend is guided by the always-increasing importance of AI in the military sector. Palantir, beyond the US, signed several contracts with NATO members attending programs like SOCOM.
Raytheon Technologies (RTX) – Missile & Defense Systems
The military portfolio offered by RTX comprises several services. Among them, there is the Radar AN/TPY-2 for hypersonic missile defense. Another service is the LTAMDS (Lower Tier Air and Missile Defense Sensor) which demonstrated advanced skills in terms of intercepting and target tracking. Based on this, the US Army launched a massive production after a contract of $2B with several international countries. Last but not least, the NGSRI (Next-Generation Short-Range Interceptor) was made to substitute Stinger, improving drastically precision and capacity.
Raytheon Technologies serves more than 80 countries and, in some of them, has established productive sites via partnerships with Kongsberg and MBDA, for instance. This interoperability of NATO countries allows for the utilization of the same technologies and, in a certain way increases the European strategic autonomy.
RTX has a strong relevance in terms of defensive systems. The Patriot System, utilized in 19 countries (Germany, USA, Ukraine), is one of them. Germany has signed a contract worth $1.2B to get this system plus radar Configuration 3+, C2. This deal improved the defensive capability of NATO overall. NATO also ordered almost $700M of Stinger Missiles, guaranteeing a constant production until 2029, considered essential for supporting Ukraine.
Conclusion
War times are constantly reshaping the international investment landscapes, enticing energy transactions, technological innovations, and defense spending. It is crucial to acknowledge the existence of deep uncertainties, and investors must be ready to identify asymmetric opportunities. At the same time, people who put money into investing have to keep a balanced exposure, assess geopolitical risks, do their own independent research, and think long term.
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Reference List:
Lockheed Martin (LMT):
Northrop Grumman (NOC):
Chevron (CVX):
Palantir Technologies (PLTR):
Raytheon Technologies (RTX):
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