With the war in Ukraine ongoing and geopolitical tensions with China showing no signs of receding, there is a renewed focus on defense spending not seen since the Cold War. Consequently, we expect investor interest in the defense industry to remain high in the coming years. This piece reviews critical aspects of the defense industry and highlights where future modernization dollars could be spent.


The Department of Defense (DoD) is America’s largest government agency with the mission to provide the military forces needed to deter war and ensure our nation’s security. The DoD and Department of Energy (responsible for nuclear activity) together have annual budgets for research and development (R&D) of new technologies that easily exceed $100 billion. The total budget for U.S. national defense now exceeds three-quarters of a trillion dollars a year. Procurement and R&D make up over a quarter of a trillion dollars of this. The direction of future R&D and procurement spending will have a major impact on many industries in addition to traditional defense, with significant implications for investors.

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