Is Lockheed Martin Stock (LMT) Still A Buy In 2025? 4 Key Signals Amid Rising Middle East Tensions

When it comes to global defense and aerospace, few companies are as pivotal, or as closely tied to unfolding geopolitical events, as Lockheed Martin (LMT).

From state-of-the-art fighter jets and missile defense systems to AI-integrated battlefield technologies and space-based assets, Lockheed stands at the forefront of U.S. national security and remains one of the Pentagon’s most trusted contractors.

As tensions escalate in the Middle East following Israel’s latest strikes on Iranian military and nuclear infrastructure—and with the U.S. signaling involvement, investor attention has returned sharply to defense stocks.

Lockheed Martin saw a short-term bump in its share price, but the bigger question is: will increased global conflict drive long-term upside or short-term volatility?

While competitors like Boeing and RTX continue to chase defense contracts, Lockheed still leads in core platforms like the F-35 Lightning II, THAAD missile defense, and UH-60 Black Hawk. Its $173 billion backlog and global client base provide a strong revenue runway across air, sea, space, and cyber domains.

However, Lockheed isn’t immune to challenges. In 2025, it lost the NGAD contract to Boeing, and the U.S. proposed sharp cuts to F-35 orders, triggering a stock drop. Canada has also raised red flags over ballooning F-35 costs.

And while war headlines often cause defense stocks to spike, analysts warn that prolonged conflict can actually squeeze defense budgets, especially when operational costs crowd out new procurement.

Despite this, Lockheed’s fundamentals remain solid. It continues to double down on emerging technologies, like AI-powered command systems, autonomous combat platforms, and small satellite constellations, while maintaining a 2.71% dividend yield and a 22-year streak of dividend increases.

So is Lockheed Martin just reacting to geopolitical noise, or is it a long term defense powerhouse quietly preparing for the next era of digital warfare?

Let’s find out through the Invest Diva Diamond Analysis (IDDA) framework: Capital, Intentional, Fundamental, Sentimental, and Technical.

IDDA Point 1 & 2: Capital & Intentional

Before investing in Lockheed Martin (LMT), ask yourself:
✅ Does investing in a military company align with your personal values around warfare and national defense?
✅ Do you believe Lockheed’s investment in AI, autonomous systems, and space-based defense will power the next wave of military innovation?
✅ Are you comfortable investing in a company with steady cash flow, a $173B backlog, and a strong dividend record, but facing budget risks and intense competition for future defense contracts?

Lockheed Martin isn’t just a weapons manufacturer, it’s a cornerstone of U.S. and allied defense infrastructure. With operations spanning air, land, sea, space, and cyber domains, it plays a central role in shaping 21st-century warfare. The F-35 program alone generated over $18B in 2024, accounting for more than a quarter of total revenue. Its scale, long-term contracts, and strategic partnerships give it both resilience and visibility.

But there are headwinds: the company lost the NGAD contract to Boeing, F-35 order reductions have rattled markets, and over 70% of its revenue depends on U.S. defense budgets, which are subject to political shifts. While recent Middle East tensions (e.g., Israel–Iran escalation) triggered a short-term rally, analysts caution that military conflict doesn’t always translate into lasting profits for defense contractors.

That said, Lockheed’s investments in AI-integrated systems, next-gen missile defense, and space technology (like small satellite constellations) position it for the future of defense. With a 2.71% dividend yield, 22 years of dividend growth, it offers a mix of income, value, and innovation potential.

For investors who want exposure to the defense sector, believe in the long-term need for national security infrastructure, and seek stable cash-generating stocks with future-facing strategies, Lockheed Martin could be a core holding, not a short-term trade, but a strategic asset in a volatile world.

IDDA Point 3: Fundamentals

🔹Lockheed Martin (LMT) remains fundamentally solid with consistent earnings performance, sector-leading dividend metrics, and deep investment in future-facing technologies. In Q1 2025, revenue rose 4.47% YoY to $17.96 billion, and diluted EPS came in at $7.28, beating expectations for the fourth straight quarter. Growth across three of its four business segments, especially Missiles and Fire Control (+12.7%), demonstrates its diversification beyond just aircraft. Margins expanded across all divisions, pointing to improved efficiency and operational strength. (Key Signal 1)

🔹The F-35 program alone generated over $18 billion in 2024, making up more than a quarter of total revenue. However, reports of U.S. Department of Defense reducing F-35 orders by 31 jets have raised concerns, even though analysts believe the reduction is temporary and tied to budget reallocations toward newer programs like the F-47 and Golden Dome. These cuts are unlikely to impact production until 2028 or later, and the long-term forecast for 2,500+ U.S. F-35 units remains unchanged. (Key Signal 2)

🔹Lockheed’s $173B backlog ensures stable forward revenue. It trades at a reasonable 21x P/E, below the sector’s high-growth names, and offers a 2.71% forward dividend yield, the highest among major U.S. defense contractors. Its 22-year dividend growth streak and moderate 44.57% payout ratio reinforce its appeal to income-focused investors. With continued investments in AI, cybersecurity, space systems, and autonomous technologies, Lockheed is well-positioned for long-term defense modernization cycles. (Key Signal 3) 

Fundamental Risk: Medium 

IDDA Point 4: Sentimental

Strengths

✅ Strong Financials and Backlog – Lockheed has a $173 billion backlog and steady revenue growth, with three out of four segments reporting YoY gains. EPS consistently beats estimates, and margins are improving across divisions.

✅Attractive Dividend Profile – With a 2.71% forward yield, 22 consecutive years of dividend increases, and a manageable 44.57% payout ratio, LMT is attractive for income-focused investors, especially compared to peers.

✅Strategic Investment in Future Tech – Lockheed is heavily investing in AI, cybersecurity, autonomous systems, and space-based technologies—positioning itself for long-term relevance as defense priorities shift toward digitized warfare.

Risks

❌Heavy Reliance on U.S. Government Contracts – Over 73% of revenue comes from U.S. defense spending. Any cuts, delays, or shifts in budget priorities (e.g., F-35 order reductions) can significantly impact revenue.

❌Recent Program and Contract Losses – Lockheed lost the NGAD contract to Boeing and faces F-35 program scrutiny due to budget adjustments and technical delays, raising concerns about future competitiveness.

❌Geopolitical Conflict Uncertainty – While geopolitical tensions can cause short-term stock rallies, prolonged or expensive conflicts may divert defense budgets away from procurement (where Lockheed earns) toward operations and logistics.

Market sentiment toward Lockheed Martin remains cautiously optimistic despite recent turbulence from the loss of the NGAD contract to Boeing, proposed F-35 order cuts, and concerns over rising costs in Canada’s procurement.

While LMT stock dropped around 5% on June 11 due to reduced U.S. F-35 orders, the cuts were later clarified as modest and still under budget review.

A brief rally followed on June 13 amid Middle East tensions, but analysts warn that conflict driven stock surges are often short-lived and not directly tied to contractor profits.

Sentiment could strengthen further if Lockheed secures new contracts or funding, particularly in missile defense and space systems, where its investment in AI and digital warfare enhances its long-term positioning.

Sentimental Risk: High

IDDA Point 4: Technical

On the weekly chart: 

🔻 The future Ichimoku cloud is bearish, indicating continued downward momentum.

🔻 Price action remains below the cloud, which is acting as a strong resistance zone.

🟢 While subtle, the Tenkan line has crossed above the Kijun line—forming a bullish crossover, also known as a golden cross, which can be an early sign of a potential trend reversal. (Key Signal 4)

On the weekly chart, LMT has been in a choppy uptrend from 2021 to October 2024, marked by several periods of consolidation. It reached a new high of 606 in October 2024 before entering a steep downtrend that continued until February 2025. Since then, the stock has been trading in a consolidation phase. The Ichimoku cloud shows a bearish outlook, indicating ongoing downward momentum. Price action remains below the cloud, which continues to act as a strong resistance zone. However, there is a subtle but notable early bullish signal: the Tenkan line has crossed above the Kijun line, forming a golden cross that may suggest a potential trend reversal ahead. 

Investors looking to get add LMT to their portfolio can consider the following Buy Limit entries:

📌449.10 (High Risk)

📌412.43 (Medium Risk)

📌360.67 (Low Risk)

Investors looking to take profit can consider the following Sell Limit levels:

🎯632.45 (Short term)

🎯606.74 (Medium term)

🎯680.31(Long term)

Here are the Invest Diva ‘Confidence Compass’ questions to ask yourself before buying at each level:

1. If I buy at this price and the price drops by another 50%, how would I feel? Would I panic, or would I buy more to dollar-cost average at lower prices? (hint: this question also reveals your CONFIDENCE in the asset you’re planning to invest in).
   
2. If I don’t buy at this price and the stock suddenly turns around and starts going up again, will I beat myself up for not having bought at this level?

Remember: Investing is personal, and what is right for me might not be right for you. Always do your own due diligence. You should ONLY invest based on your own risk tolerance and your timeframe for reaching your portfolio goals

Technical Risk: Medium

Final Thoughts on Lockheed Martin (LMT)

Lockheed Martin continues to prove why it’s a cornerstone of global defense, offering long-term value through its diversified portfolio, stable cash flow, and forward-looking investments in AI and space technologies.

While recent program losses and budget uncertainty have created near-term pressure, the key signals such as the company’s $173B backlog, strong dividend track record, and strategic position in modern warfare technologies offer reassurance for long-term investors.

With current prices trading below fair value estimates and early technical signals hinting at a potential reversal, LMT may present a compelling buying opportunity, especially for those seeking exposure to the defense sector in an increasingly uncertain geopolitical climate.

➡️ Recommendation: Buy / Moderate-Risk Long-Term Growth Asset

Lockheed Martin (LMT) presents a compelling opportunity for long-term investors seeking exposure to the global defense sector. With a $173 billion backlog, strong dividend profile, and strategic investments in AI, space systems, and next-gen missile defense, LMT remains a cornerstone of modern military infrastructure.

While near term risks such as F-35 order cuts and contract losses weigh on sentiment, its fundamentals remain solid and future growth areas are well aligned with evolving global defense needs. It is a moderately bullish pick for investors who value stability, innovation, and geopolitical resilience.

Overall Stock Risk: Medium

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