NEW YORK, Jan 8, 2026, 10:08 EST — Regular session
- Lockheed Martin shares were up about 7% in morning trade, bouncing after a sharp drop a day earlier.
- President Donald Trump floated a $1.5 trillion 2027 U.S. military budget, while also moving to curb dividends and buybacks at defense contractors.
- Investors are watching for details on enforcement and for Lockheed’s next earnings update on Jan. 29.
Lockheed Martin shares rose 7.4% to $533.71 on Thursday, leading a rebound in big U.S. defense names after President Donald Trump talked up a sharp increase in Pentagon spending. Northrop Grumman climbed 10.1% and RTX gained 5.5% in early New York trading.
Trump said on Wednesday the 2027 U.S. military budget should be $1.5 trillion, well above the $901 billion approved by Congress for 2026, and suggested tariff revenue would help fund it. Capital Alpha Partners defense analyst Byron Callan said the post raised questions about where the money would be directed and whether the defense sector could even absorb a jump of that size. 1
The spending pledge followed Trump’s threat to block dividends and share buybacks — when a company repurchases its own stock — at defense contractors until they speed up weapons production. RBC Capital Markets analysts led by Ken Herbert wrote the budget talk could “offset” the hit from tighter capital-return rules, but added “there is significant uncertainty” around a final defense budget. Morgan Stanley analysts led by Kristine Liwag called limits on capital return an “incremental negative,” but said the size looked manageable. 2
Trump’s executive order said defense contractors were not permitted to pay dividends or buy back stock “until such time as they are able to produce a superior product, on time and on budget.” It also said Pentagon chief Pete Hegseth would identify underperforming contractors within 30 days and laid out a remediation process, while directing the SEC to consider rules to implement the proposed ban. Lockheed has been a consistent capital-return story: in October it raised its dividend for the 23rd year in a row to $3.45 per share and authorized up to $2 billion in buybacks, taking total remaining repurchase authorization to $9.1 billion. 3
Lockheed has also been pointing to demand. The company said on Wednesday it delivered 191 F-35 fighter jets in 2025, a record and up from 110 in 2024, and said annual F-35 production was running at a pace five times faster than any other allied fighter program currently in production. The F-35 program contributes roughly a third of Lockheed’s overall revenue. 4
The sector has been volatile even as the broader market looked ahead to macro data and the start of earnings season. Lockheed fell 4.8% on Wednesday after Trump’s initial comments on payouts, in a session when the S&P 500 ended down 0.34%. 5
The next hard catalyst for Lockheed is its earnings update. The company said it will webcast its fourth-quarter and full-year 2025 earnings results conference call on Thursday, Jan. 29 at 8:30 a.m. ET, with investors likely to press management on production pace, contract execution and what any payout restrictions could mean for cash deployment. 6
But the policy push cuts both ways. A looser spending outlook can lift the top line, yet hard limits on buybacks or dividends would hit shareholder returns that have helped anchor valuations in the group, and the scope of enforcement remains unclear.
Traders are watching for follow-on detail from the Pentagon on how it will flag “underperforming” contractors, and for Lockheed’s Jan. 29 earnings call as the next scheduled checkpoint.
