Defense tech investors thought the war in Iran could make them millionaires. Instead, they faced a Wall Street bloodbath - Fortune

What the report says

Fortune reported that investors who expected a defense-stock surge from the U.S. war with Iran have instead seen several major contractors lose ground, despite heavy Pentagon spending. The outlet said the U.S. has spent $37.5 billion since President Donald Trump launched Operation Epic Fury in late February, while trading in large defense names initially jumped as the conflict began.

According to Fortune, those early hopes faded: Northrop Grumman has fallen more than 30%, L3Harris Technologies more than 20%, and Lockheed Martin nearly 13%. RTX, formerly Raytheon Technologies, had been down about 18% at one point but later recovered to a 4% gain after stronger-than-expected second-quarter results. The report noted that U.S. forces have used large numbers of advanced munitions, citing the Center for Strategic and International Studies, but investors are now focused on whether replenishment and budget proposals will become actual contracts and earnings.

Fortune framed the market reaction as a reminder that wars do not automatically produce lasting stock gains. Analysts cited in the article said much of the expected benefit may have already been reflected in share prices, and that defense returns often depend on being invested before conflicts and before spending is approved. Political risks, possible inflation effects, and the 2026 midterm outlook were also cited as factors that could affect future Pentagon budgets.

The report also highlighted growing investor interest in defense technology startups such as Anduril, Shield AI and Saronic. Fortune said venture funding in the sector hit $19.8 billion in the first quarter of 2026, though startups still receive a very small share of Pentagon contracting compared with legacy defense companies.