In the midst of an arms race, it’s probably a safe bet to bet on defense stocks.
lockheed martin (LMT -0.17%) manufactures America’s only two fifth-generation “stealth” fighters, the F-22 Raptor (no longer in production) and the F-35 Lightning II (no longer in production).
That’s pretty impressive. Most other countries in the world still fly non-stealthy fourth-generation jets. Nevertheless, the F-22 was introduced into the US military 20 years ago in 2005, and the F-35 was introduced 10 years ago in 2015. Although better than most military aircraft, neither is state-of-the-art anymore.
Meanwhile, in China, the People’s Liberation Army demonstrated not one but two new fighter jets in the last week of December, both of which appear to be sixth-generation designs.
And we don’t have any 6th generation jets at all.
chinese new year surprise
TheWarZone.com reported on both Chinese aircraft late last month. The first is described as a “stealthy, high-performance, 6th-generation manned fighter aircraft with no tail.” The aircraft is larger than the F-22 and F-35, measuring “approximately 70 feet from nose to tail,” and is likely powered by three unconventional engines. TWZ says the engine and size suggest that the new aircraft may be designed for long-range operations, perhaps as a tactical bomber rather than a fighter.
TWZ reports that the aircraft will be manufactured by China’s Chengdu Aircraft and will likely be called the J-36.
In less than 24 hours, a second stealth fighter jet was spotted over China. The second aircraft, which has a different shape, has two engines instead of three, and also lacks a tail, is said to be smaller than the first and is believed to be from a different manufacturer. : Shenyang Aircraft. Interestingly, TWZ could not even confirm whether the second aircraft had a cockpit, raising the suggestion that it could be a drone.
Apart from all this, TWZ points out that China is rumored to be developing a stealth bomber known as JH-XX, and the aircraft spotted in December could be related to this program. suggested that there is.
Image source: Getty Images.
What this means for American defense contractors
Commenters noted that while China has not made any official announcements about these aircraft, their appearance in such rapid succession is likely no coincidence. Rather, unofficial footage of the aircraft during test flights shows that China is making progress in sixth-generation fighter jet technology and is making progress toward its goal of fielding these advanced fighters by 2035 at the latest. This seems to be a kind of message to the country’s rivals, confirming that there is a strong presence in the country.
So what does that mean for Lockheed Martin, America’s only manufacturer of stealth fighter jets? What it means for Boeing (B.A. 0.14%)initially bid Lockheed to develop its own version of what would later become the F-35, and Northrop Grumman as well. (NOC -0.76%)which built the B-2 stealth bomber and is currently building its successor, the B-21?
Well, the last question is the easiest to answer. In 2023, Northrop Grumman withdrew from the race to develop a sixth-generation fighter for the U.S. Air Force, the so-called “Next Generation Air Dominance,” or NGAD fighter, so Northrop is no longer relevant to this story. The remaining candidates are Lockheed Martin and Boeing (although the latter is heavily underperforming and relies on an unprofitable defense division that it is unclear whether it will sell to support an acquisition). ).
Now, the good news here is that the Air Force hopes to have NGAD flying sometime in the 2030s. This is almost the same schedule as shown by China. So despite what happened last week, China is not necessarily taking over the lead in sixth-generation fighter jet technology from the US aerospace giant.
Still, the race is closer than we think — and for investors, it’s a clue that a sixth-generation arms race is underway. This means that the Pentagon must actually continue to fund NGAD, despite reports last year that the program might be canceled due to cost concerns. This is good news for Lockheed. I have to think that Lockheed is most likely to build a new stealth fighter based on their experience building the previous two. This also suggests why Boeing may decide not to sell its defense business.
No matter how much money the defense is losing to Boeing today, there is even a chance that Boeing will win the NGAD contract tomorrow to build up to 200 fighter jets for $700 million each ($140 billion total). , a strong clue that Boeing will remain in this competition. – At least until we lost NGAD to Lockheed.
