Lockheed Martin Corp. (LMT) expects defense spending to stay elevated for years, and CEO Jim Taiclet has a pretty simple explanation why: Russia, Iran and China keep expanding their military capabilities.

Taiclet laid out the company's outlook Thursday on Lockheed Martin's third-quarter 2026 earnings call, leaning on three themes: deterrence, integration and manufacturing scale. He pointed to Russia's activity in Europe, Iran's regional ambitions and China's military expansion throughout the Pacific as the forces supporting sustained national defense investment.

"Our product is deterrence. We want to create deterrence from armed conflict," the CEO said.

That's a nice way to frame it. The product isn't a missile or a fighter jet so much as the thing those weapons are supposed to prevent. And to make that work, Taiclet argued, you need faster deployment, effective integration and large-scale production. Munitions, he said, is where the company is moving its operating model the fastest.

"Our munitions business is transforming to deliver at wartime speed and scale. That shift now extends beyond interceptors into air dominance," Taiclet noted.

Billions Flowing Down the Supply Chain

To meet the demand it sees coming, Lockheed is expanding its workforce and supplier network. The company awarded new contracts for PAC-3 and THAAD missile production, and the numbers are not small: $4.7 billion to L3Harris Technologies, Inc. (LHX) for PAC-3 propulsion, $14.7 billion to Boeing Co. (BA) to triple PAC-3 seeker production, and $1.6 billion to Northrop Grumman Corp. (NOC) for propulsion and other missile components.

Taiclet also pitched integrated capabilities across platforms and military domains as a competitive advantage. His argument: connected systems can deliver more value than individual ships, aircraft or radars sitting on their own.

Lockheed Raises Outlook as Backlog Hits $292 Billion

All of this came alongside third-quarter results that beat expectations and pushed the company to raise its full-year outlook. Lockheed Martin reported quarterly earnings of $7.97 per share, topping the $7.42 analyst consensus and up from $6.95 a year earlier.

Sales growth across all four business segments helped drive the performance, while the company's backlog reached a record $292 billion. That's a lot of visibility into future defense revenue, which is exactly the kind of thing investors in a defense contractor like to see.

There's also the F-35. Lockheed Martin and the U.S. Department of Defense agreed on a framework for 850 fighter jets over 10 years, targeting annual production of 156 aircraft. The deal covers spare parts, upgrades and sustainment too, though final pricing and contract awards remain subject to funding, congressional authorization and negotiations. In other words, the framework is a plan, not a signed check.

"This multiyear framework strengthens the way we can plan and invest in the F-35 enterprise," Taiclet said.

MarketDash's Edge Rankings place Lockheed in the 94th percentile for quality and the 65th percentile for momentum, reflecting strong performance in both areas.

Price Action: Year-to-date, LMT stock surged 21.97%, according to MarketDash Pro. During Friday's pre-market trading session, the stock was trading 0.58% lower at $586.50.