Lasers - a good example for a still existing weapon while no army has it well established within their forces. A circumstance which will certainly change in the next years to come.
Let’s take last things first. No – a little peace deal on one or the other corner of the world – like in the Gaza strip – will not change defense business. It is like a man on a bike cannot stop a tank in full speed. There are other triggers and activators that will substantiate the gold-rush for the years to come.
But now let us start from the beginning. The global arms industry has experienced explosive growth for years, fueled by geopolitical upheavals, technological innovation, and massive investments in nations’ defense readiness. Among the ten largest defense corporations and conglomerates, both revenue and market capitalization have shown extreme dynamics, but also reveal vulnerabilities and risks. This development stretches across a decade—pivotal turning points being the Russian attack on Ukraine in 2022 and the subsequent historic shift in Europe. Will a potential lasting peace in the Middle East now mark an end to the cash flow to the arms industry? And what does it mean for the order books when a peace deal in Ukraine may come?
Explosive Growth – Drivers of the Defense Sector
From 2015 to 2025, global demand for armaments and high-tech defense solutions has virtually exploded. Especially in the last three years, dramatic increases in defense budgets have fueled the revenue growth of many global players. In the US, Lockheed Martin, RTX (Raytheon), Northrop Grumman, and General Dynamics have set new records. RTX increased its market capitalization to around 161 billion US dollars by early 2025, making it one of the industry’s most valuable companies. Honeywell and L3Harris also show strong performance through diversification and a focus on electronic warfare. In Europe, Rheinmetall, driven by massive procurement programs, achieved extraordinary growth in stock price and revenue, and since 2022 has multiplied its enterprise value. At the start of 2025, its share price had risen by 2,340 percent over five years; revenue targets have been raised multiple times, with the company aiming for a consolidated mid-term revenue between 20 and 30 billion euros.
Winners of the Decade – The Rise of New Champions
Rheinmetall is undoubtedly one of the biggest winners, taking advantage of the Europe-wide investment surge and the supply of Ukraine to strategically pivot almost entirely to the armaments business. As recently as 2018, civilian products accounted for about half the company’s revenue; by 2024, 85 percent is defense-related. Inclusion in major stock indices such as the DAX40 and Euro Stoxx 50 underscores the company’s meteoric rise. US-based RTX, Lockheed Martin, and General Dynamics have maintained their positions via innovations and mega-deals, particularly in aviation and missile markets.
In France, Safran and Thales benefited from large European contracts for aviation and electronics, while Britain’s BAE Systems expanded its portfolio through international partnerships and mergers. For Honeywell and L3Harris, electronic and drone sector expansion is at the heart of their strategies, as reflected in their numbers.
Weaknesses and Risks – The Dark Sides of the Boom
Despite the impressive revenue growth of many corporates, investors and policymakers must watch trends and risks closely. Rheinmetall’s extreme dependence on European states—80 percent of revenue comes from there—entails strategic vulnerability. Political shifts or peace settlements could markedly slow growth, and past investments may dampen returns. The company’s civilian automotive segment, meanwhile, has struggled for years and faces continued revenue decline given industry transformation and digital trends.
BAE Systems and Thales face weaker profitability and margin declines in international competition, mainly due to fluctuating European budgets and market uncertainties. Asian conglomerates such as NORINCO and AVIC are technologically ambitious, but lack of transparency and political uncertainties hinder global expansion.
Market Capitalization as a Barometer – The Front-Runners
RTX stands out internationally at over 160 billion US dollars, closely followed by other US players. Market capitalization highlights operational strength and investment attractiveness—Rheinmetall, as Europe’s champion, made an extraordinary leap, setting records in the short term, though long-term outlook is closely tied to the broader political climate.
A Strong Decade, No End to the Boom in Sight
The decade from 2015 to 2025 demonstrated unprecedented dynamics in the defense industry. Growth, boom, and resulting risks shape the landscape—winners and losers shift based on technology and geopolitics. Firms like Rheinmetall and RTX are key drivers, but the shift toward greater innovation, political flexibility, and global diversification will define the years ahead.
But even a period of de-escalation or “peace” will not halt, but rather accelerate, the upward trend in global defense spending. Let’s focus on the main drivers of such lasting boom. Firstly, all armies are outdated. Dual-use technologies (e.g. satellite navigation, communications, AI software) blur the distinction between civilian and military applications. This ensures that peacetime technological investments—often justified for economic competitiveness—simultaneously boost defense capability, making armament budgets ever broader and more continuous.
And you can’t stand behind. Artificial Intelligence is revolutionizing every domain of life – so it is on warfare: from autonomous drones and cyber defense to surveillance and decision support. The quest for technological superiority triggers a costly arms race in advanced digital infrastructure, cloud computing, and next-generation weapon systems, compelling both traditional defense budgets and civilian R&D to increasingly merge.
The often claimed “blurring line between peace and war” will also have its effects. Hybrid and cognitive warfare—which includes cyber attacks, disinformation campaigns, and economic sanctions—means security policy must encompass not just hardware, but also resilience against digital and psychological threats. Defense investments thus extend well beyond conventional weapons to embrace cybersecurity, informational resilience, and economic “hardening” against sanctions or trade disruptions.
Last, but not least broader geopolitical tensions, from trade conflicts to sanctions and global competition for strategic resources, are now seen as ongoing threats, not episodic crises. That leads to more robust, permanent military, technological, and economic “readiness,” which is reflected in large, recurring investments in deterrence, infrastructure, and technological modernization. The re-nationalization will most likely lead to a re-localization of production capabilities back to Europe and the USA.
Hence, even in a scenario of smaller-scale direct military confrontations, the expansion and complexity of dual-use and AI-based systems, as well as the broadening of what counts as “warfare,” mean global defense spending is structurally set to increase further in the coming years. For all in the defense and armament sector: a small peace agreement on one or the other part of the world will not mean again a downturn in business. The times are over that especially the Europeans believed in an absurd dream of eternal peace.
About The Author
