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The U.S. Department of Defense has issued an urgent call to America's missile makers: dramatically ramp up production to meet growing global threats. This directive constitutes a seismic shift in defense spending that could deliver massive gains for Boeing (BA), which holds some of the military's most critical missile contracts.
Recent reports show the Pentagon aims to secure capacity for nearly 2,000 PAC-3 missiles from fiscal years 2024 to 2026 with a new $9.8 billion contract to Lockheed Martin (LMT).
This production surge comes as geopolitical tensions rise and the U.S. military consumes munitions at an unprecedented rate, creating what defense analysts call a "golden age" for missile contractors.
Boeing could become one of the biggest beneficiaries.
Boeing May Become The Pentagon's Go-To Missile Supplier
Boeing holds multiple high-value contracts that position it perfectly for the production surge. The company's Joint Direct Attack Munition (JDAM) program received a massive $7.5 billion contract last year to convert "dumb" bombs into precision-guided munitions.
These kits, which Boeing produces at its St. Louis facility, transform standard bombs into GPS-guided weapons capable of striking targets with pinpoint accuracy. With the Pentagon pushing to increase JDAM production, this contract alone could see significant expansion.
Even more compelling is Boeing's role as the sole producer of the GBU-57 Massive Ordnance Penetrator (MOP), a 30,000-pound bunker-busting behemoth designed to destroy deeply buried targets.
After the weapon's first combat use against Iranian nuclear facilities, the Air Force is preparing a $123 million contract to replenish depleted stocks. Budget documents show the Pentagon intends to at least triple MOP production capacity, with Boeing as the prime contractor. The company is also co-developing the Next Generation Penetrator (NGP) with Applied Research Associates.
Boeing's Defense Segment Shows Surprising Strength
Boeing's Defense, Space & Security segment is quietly becoming quite profitable. In Q2 2025, BDS posted a 1.7% operating margin. Analysts expected negative margins throughout the year. It had $110 million in Q2 operating profit ($913 million loss in the year-ago quarter) on $6.6 billion in revenue, with backlog growing to $74 billion. International orders constitute 22% of this backlog as allies rush to replenish their own munitions stockpiles.
However, this surge doesn't seem to be temporary. The Pentagon's plan to secure 2,000 PAC-3 missiles represents just one component of a broader rearmament effort that includes air-to-air missiles, cruise missiles, and precision-guided bombs.
Boeing's unique position stems from its diverse missile portfolio. Unlike competitors focused on specific niches, Boeing produces everything from 250-pound Small Diameter Bombs to 30,000-pound MOPs. This diversification insulates the company from program-specific risks while maximizing exposure to the overall munitions buildup.
Should You Buy or Sell BA Stock Now?
The company's transformation from fixed-price development contracts to profitable production programs is gaining momentum. This positivity is translating into gains in the stock market, as BA stock has rebounded by nearly 25% year-to-date (YTD).
You shouldn't forget that Boeing's main commercial aviation segment is seeing more orders, as the company is being used as a bargaining chip for countries negotiating lower tariffs.
Plus, Boeing has $53.3 billion of debt on its balance sheet, and interest rate cuts will help on that front, too.
Analysts rate it a consensus “Strong Buy,” and the mean price target is $255, with the highest price target at $287.
