There Are Worries the U.S. Could Run Out of Missiles in Iran. These Contractors Are Who It's Turning To. -- Barrons.com

Al Root

A lot of missiles are being launched -- and intercepted -- in the ongoing conflict between the U.S. and Iran.

Running out of certain critical missile technologies is a possibility. However low inventories get, replenishing the stocks and rearming global militaries will be a boon for many defense contractors.

"Manufacturers just can't make them fast enough," said Vertical Research Partners analyst Rob Stallard. "There was already way more [missile] demand than supply, and [Iran] exacerbates the issue." How bad the acute pressure gets depends on how long the conflict lasts.

Stallard has been highlighting "strong demand" for missiles for months, noting that the U.S. Defense Department has been asking suppliers to increase production since late 2025.

Missiles, of course, aren't just missiles. There is an entire supply chain that includes components such as solid rocket motors, sensors, castings, and warheads.

The U.S. government has been willing to commit capital to increase production. In January, L3Harris Technologies announced plans to spin off its solid rocket motor business into a standalone company. The Defense Department is planning to invest $1 billion in an initial public offering to raise funds for production expansion.

What's more, the DOD has agreements with three large missile producers, Lockheed Martin, RTX, and Boeing, to triple output over the coming few years.

Lockheed makes Patriot interceptors. Capacity is rising from roughly 600 a year to 2,000-plus. What's more, in January, the Defense Department and Lockheed announced a plan to quadruple the number of Terminal High Altitude Area Defense, or THAAD, interceptors, to 400 per year from 96.

RTX makes SM-3 interceptors, AMRAAM, advanced medium-range air-to-air missiles, and Tomahawk cruise missiles. Annual AMRAAM capacity is moving to "at least" 1,900. Tomahawk capacity will be 1,000-plus Tomahawk cruise missiles annually. RTX also plans to expand SM-6 interceptor production to more than 500 per year, while increasing SM-3 production.

Boeing can make tens of thousands of JDAMs, joint direct attack munitions, annually.

According to the 2026 National Defense Strategy and budget reconcilliations, the U.S. inventory of AMRAAMs, artillery, and Javelins is moderate to healthy. Inventories of the most advanced interceptor missiles, however, could run low. That will only put more pressure on the likes of Lockheed and RTX to expand production as fast as possible.

The drive for more missiles will help both stocks. They are, however, large, diversified contractors. Stocks with the most missile-related exposure relative to total sales are Karman, Leonardo DRS, Hensoldt, RTX, Lockheed Martin, L3Harris Technologies, Thales, BAE Systems, Rheinmetall, and Northrop Grumman.

That's organized from high exposure to low exposure. On the low-end, missiles account for about 10% of Northrop's sales, according to Vertical Partners data. At the high end, missiles account for roughly 50% of Karman's sales.

(Karman stock rose 5.6% on Monday, following the breakout of hostilities with Iran, while the S&P 500 was flat. Gains left shares up about 178% over the past 12 months).

"We have 60% confidence that the current war will last 20 to 40 days and conclude when the U.S. and Israel are confident that Iran's missile and drone inventories and capacities have been destroyed," wrote Capital Alpha Partners analyst Byron Callan on Saturday.

He worries that the end of an Iranian threat could cause the U.S. to pull back on missile expansion. That probably won't happen. The U.S. and its allies will likely maintain higher inventories than in the past, and President Trump has his Golden Dome missile defense project, too.

Missiles and the systems that shoot them down have emerged as key military technologies for the foreseeable future.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 03, 2026 06:51 ET (11:51 GMT)

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