Rockets slump while defence's IT contractors quietly climb

Its typical stock gained 21.7%, while the typical space stock and the typical drone maker both fell.

• Software and services: typical stock up 21.7% over 3 months
• Space: typical stock down 7.4% over 3 months
• Drones and autonomy: typical stock down 17.9% over 3 months

Lockheed Martin rose 9.4% after a record backlog, while the typical engine maker fell hardest of any segment despite GE's stronger servicing outlook.

• 2026-10-24 [LMT, RTX, NOC, LHX, HII]: Lockheed Martin jumped 9% after reporting a record backlog and lifting its outlook. Why it matters: A record order book is the clearest sign yet that Pentagon spending is turning into signed work for the big US prime contractors. RTX rose 2% and Northrop Grumman 3% alongside it, and L3Harris and HII are also reported adding to their backlogs, so the read-across runs through the prime contractors and the suppliers that feed them. L3Harris and HII report on 29 October and General Dynamics on 30 October, which will show whether the same pattern holds.
• 2026-10-22 [RTX, GE]: RTX and GE Aerospace both pointed to a stronger outlook on their third-quarter calls: RTX on its defence backlog and 2026, GE on services. Why it matters: RTX's backlog and higher 2026 outlook show defence demand is still being booked. GE's higher services outlook points to money coming from servicing engines already in use. Both feed down to engine and component suppliers.
• Lockheed MartinLMT: up 9.4% over 7 days
• GE AerospaceGE
• Aero engines: typical stock down 12.0% over 7 days

The typical one costs 13.5 times next year's expected profit, while the typical space stock costs far more and loses money.

• Software and services: typical price against next year's expected earnings 13.5x
• Space: typical price against next year's expected earnings 38.6x · typical net margin -38.7%
• Drones and autonomy: combined market cap $13.5bn, 0.3% of the theme

The typical one grew sales 7.2% on a year before, and the coming midterm elections decide who writes US defence budgets.

• Software and services: typical revenue growth +7.2%
• 2026-11-03: US general election (midterm elections). The vote decides the makeup of Congress, which writes the defence authorisation and appropriations bills. The result can shift the outlook for US defence budgets and US primes. Source
• Aero engines: typical stock down 7.2% this year so far

Look for whether they echo CACI's raised guidance, and whether the vote on 3 November shifts the outlook for defence budgets.

• 2026-10-28: Parsons (PSN, Software and services) reports earnings.
• 2026-11-02: Palantir (PLTR, Software and services) reports earnings.
• 2026-11-03: Leidos (LDOS, Software and services) reports earnings.
• 2026-11-03: US general election (midterm elections). The vote decides the makeup of Congress, which writes the defence authorisation and appropriations bills. The result can shift the outlook for US defence budgets and US primes. Source
• 2026-10-23 [CACI, LDOS]: CACI raised its full-year guidance after higher first-quarter earnings and revenue, and Leidos won a $95 million Defense Logistics Agency contract. Why it matters: Government IT and services contractors are seeing steady demand, with CACI lifting its outlook and Leidos adding a new award. This part of the chain tends to depend on contract flow rather than on weapons programmes.