Trump to Sell F-35s to Saudi Arabia. Why Lockheed Stock Is Rising.

Lockheed Martin has commitments to buy more than 3,500 F-35 fighter jets. (DIRK WAEM/BELGA MAG/AFP via Getty Imagess)

Key Points

• President Trump announced that Saudi Arabia will be permitted to purchase F-35 fighter jets, a deal estimated at $4 billion for Lockheed.
• The potential sale of 48 F-35 jets is expected to add about $1.50 in earnings per share for Lockheed over the contract’s life.
• Lockheed stock rose 1.6% in early trading, but its year-to-date performance is down 3%, contrasting with the sector’s 41% gain.

Defense contractor Lockheed Martin might be allowed to sell its F-35 fighter jets to Saudi Arabia, marking another win for the popular fifth-generation plane. That is good, but not great for the stock.

On Monday, President Donald Trump said he would let Saudi Arabia purchase F-35 fighter jets. The kingdom, a longtime U.S. military customer, doesn’t now have the jets.

The Biden administration paused arms sales to Saudi Arabia in 2021, reversing a policy by the first Trump administration. Biden’s administration partially lifted its ban in 2024, and in May, the second Trump administration agreed to sell Saudi Arabia some $142 billion in weapons.

Saudi Arabia is looking for about 48 jets, wrote Jefferies analyst Sheila Kahyaoglu in a Tuesday report. That would be about $4 billion in sales for Lockheed, she estimates. There would also be parts and service revenue in the years ahead.

“The potential 48 F-35s do little to change the program expectations,” Kahyaoglu said. That isn’t a bad thing: The F-35 is one of the most successful jets ever made and Lockheed has commitments to buy more than 3,500 of them.

The extra Saudi jet sales amount to about $1.50 in earnings per share for Lockheed, over the life of the contract. For context, Lockheed is expected to earn more than $30 per share annually in the coming years.

So far, more than 1,200 F-35 jets have been delivered to 20 countries. Israel is the only country in the Middle East that has them.

The F-35 is a fifth-generation fighter, which essentially means it has the latest weapons, electronics, and stealth technology. The U.S. government recently awarded a contract for a sixth-generation fighter to Boeing .

The Saudi Air Force operates a large fleet of F-15 jets, manufactured by Boeing. Those are classified as fourth-generation fighter jets.

Lockheed stock was up 0.7% at $474.00 in afternoon trading Tuesday. The S&P 500 and Dow Jones Industrial Average were down 0.4% and 0.7%, respectively. Lockheed shares have now gained roughly 3% since Trump’s announcement.

Coming into Tuesday trading, Lockheed stock was down 3% year to date and down about 11% over the past 12 months.

The declines contrast with the rest of the sector. The iShares U.S. Aerospace & Defense ETF was up 41% year to date and up 37% over the past 12 months.

While investors have been encouraged by the likelihood of higher military spending in the U.S. and Europe, the concern about Lockheed has been that growth could slow in the F-35 business. The jet is the company’s largest product by far, accounting for roughly 25% of total revenue, according to Wall Street estimates.

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