Bloomberg reports today that the U.S. Department of Defense will reduce orders for F-35 fighter jets in 2026.
The total reduction in revenue for Lockheed Martin could be as high as $3.5 billion.
Lockheed Martin did $71 billion in revenue last year.
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Lockheed Martin (NYSE: LMT), the giant defense stock that makes America’s vaunted F-16, F-22, and F-35 fighter jets, tumbled 5.5% through 11:40 a.m. ET Wednesday morning. And why?
As Bloomberg reports, the U.S. Pentagon is reducing its budget request for new F-35 stealth fighter jets in fiscal year 2026.
Image source: Getty Images.
“A U.S. Defense Department procurement request document … asked for 24 of the planes, down from 48 that were forecast,” reports Bloomberg. That’s still a $3.5 billion order, implying a hefty price tag on the planes the Pentagon does want. And the Pentagon requested $531 million extra to purchase parts to build the next batch of F-35s (which means there will be a next batch).
But logically, it also implies the Pentagon will pay Lockheed $3.5 billion less than it was expected to, for this year’s planes. Most of the reductions appear to be in orders for conventional takeoff-and-landing F-35A aircraft for the Air Force, although purchases of Navy F-35Cs and USMC F-35Bs are also taking a hit.
There’s no need to panic, though, if you own Lockheed Martin stock. While $3.5 billion may sound like a lot of money to you and me (“a billion here, a billion there… soon you’re talking real money”), and objectively, it is a lot of money, Lockheed Martin did $71 billion in business last year. A $3.5 billion haircut is only a 5% reduction in expected revenue, and it’s only for a single year.
Meanwhile, Lockheed Martin is up for potentially tens of billions of new contracts for F-55 and upgraded F-22 contracts. All things considered, I suspect this stock is going to do just fine.
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