Intel Is Different From Lockheed. The Case Against U.S. Government Investment in Defense.

Lockheed Martin gets 75% of its sales from U.S. customers. (Bay Ismoyo / AFP / Getty Images)

Lockheed Martin isn’t Intel: Having the U.S. government take a stake in the defense giant might not be such a good idea.

On Tuesday, Commerce Secretary Howard Lutnick surprised investors by suggesting that the U.S. government should have stakes in defense companies, calling out Lockheed Martin by name.

“There’s a monstrous discussion about defense,” Lutnick said on CNBC. “Lockheed Martin makes 97% of their revenue from the U.S. government. They are basically an arm of the U.S. government.”

He added that the secretary of defense is “thinking about it.”

Lockheed gets closer to 70% of its sales from U.S. customers. It wasn’t immediately clear how the commerce secretary arrived at the 97% he cited. The Commerce Department didn’t respond to a request for comment. The Defense Department referred Barron’s to the White House, which didn’t respond to a request for comment.

Lockheed said: “As we did in his first term, we are continuing our strong working relationship with President Trump and his Administration to strengthen our national defense.”

There aren’t many precedents for this kind of investment. The U.S. government has helped U.S. companies in the past, but mainly in times of distress, when capital markets dried up, such as during the 2008-2009 Financial Crisis.

More recently, Intel , which needs capital, agreed to grant the government a stake of about 10%. The purchase will be funded by $5.7 billion in unpaid Chips Act grants to the company and a $3.2 billion award from the Secure Enclave national security program.

The defense prime contractors are different from Intel, wrote Jefferies analyst Sheila Kahyaoglu in a Tuesday report. Primes, as Wall Street calls them, sell large systems direct to the government.

“The privatization of the primes is not a necessity, as the defense primes generate a substantial amount of free cash flow with investments totaling about 5% of sales,” Kahyaoglu wrote.

She added that Intel generates about 25% of its sales from U.S. customers. That number for large defense contractors is about 75%, with most of that coming from the U.S. military.

“This paints a substantially different picture to Intel, who [has] declining earnings and in a loss-making position,” she wrote.

There is no distress at Lockheed, or a need for capital that public markets can’t meet. Beyond some new, unexpected, federal policy of owning pieces of large U.S. companies just because, there isn’t a good reason for the government to invest in defense stocks. Others on Wall Street pointed out on Tuesday that government ownership could create conflicts of interest and stifle innovation.

The military, of course, will continue to outline its needs and have primes compete to provide solutions.

The current model of American industry doing the investing and building has worked well for the government and the country. The most recent example might be SpaceX. It spends much less money for better outcomes than NASA, which has started to rely more on commercial providers for its needs, instead of building its own rockets.

SpaceX, now worth some $400 billion in private markets, has essentially invented the modern space industry, accounting for more than 50% of all global space launches. Its Falcon 9 rocket has flown more than 100 times in 2025.

SpaceX also provides services for the U.S. military, which means it might be in Lutnick’s crosshairs, too.

Lockheed shares dropped 0.3% on Wednesday, closing at $454.42, while the S&P 500 and Dow Jones Industrial Average added 0.2% and 0.3%, respectively.

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