U.S. Defense Sector Expansion Under Biden: Strategic Investment Opportunities in Contractors and National Security Infrastructure

The Biden administration's strategic prioritization of national security has catalyzed a transformative phase in U.S. defense spending and infrastructure modernization. With a FY 2025 defense budget of $849.8 billion, the Department of Defense (DoD) is channeling resources into modernization, readiness, and alliances, creating fertile ground for defense contractors and infrastructure firms. Simultaneously, the Bipartisan Infrastructure Law (BIL) is reshaping the national security landscape through resilience-focused projects. For investors, this dual thrust presents compelling opportunities across aerospace, cybersecurity, and critical infrastructure sectors.

A Defense Budget for the 21st Century

The FY 2025 budget reflects a strategic pivot toward countering China and Russia, with $49.2 billion allocated to modernize the nuclear triad and $28.4 billion for missile defense systems, according to a DoD press release. Research, development, test, and evaluation (RDT&E) funding-$143.2 billion-underscores the administration's emphasis on emerging technologies like artificial intelligence (AI) and hypersonics. Procurement, at $167.5 billion, is directed toward next-generation platforms, including fifth-generation fighter jets and advanced naval vessels.

Personnel and operations remain critical, with $182 billion for military pay and benefits and $338 billion for operational readiness, according to a Brookings analysis. However, the budget also includes targeted cuts to long-term programs to preserve near-term capabilities, signaling a focus on agility in a rapidly evolving threat environment, as noted in the DoD press release.

Defense Contractors in the Spotlight

The DoD's priorities are translating into robust contract awards for industry leaders. Lockheed Martin, the top defense contractor with $64.7 billion in revenue, continues to dominate with programs like the F-35 Joint Strike Fighter and hypersonic weapons development, according to the US Funds ranking. In Q1 2025, Rocket Lab and Stoke Space secured a $5.6 billion contract for national security space launches, while General Electric was awarded a $5 billion deal for F110 engines to supply allied air forces, as reported in a ClearanceJobs roundup.

Emerging opportunities are also evident in the Navy's Pacific Deterrence Initiative (PDI), which awarded a $990 million IDIQ contract to 12 firms, including Black Construction-Tutor Perini JV and Sea Pac Engineering, for Indo-Pacific infrastructure projects, according to a GovConWire report. Similarly, Pond Constructors received a $2.5 billion, 10-year contract to modernize global fuel infrastructure at military bases, cited in the DoD press release. These contracts highlight the administration's focus on regional deterrence and supply chain resilience.

National Security Infrastructure: A $568 Billion Catalyst

Beyond traditional defense, the Biden-Harris administration's Bipartisan Infrastructure Law is fueling a $568 billion investment in critical infrastructure, with over 66,000 projects announced as of 2025, according to the Brookings analysis. The Department of Transportation alone has allocated $4.2 billion for projects like the North Station Renovation in Boston and the Washington Bridge Replacement in Rhode Island, further detailed in the Brookings analysis. These initiatives not only enhance economic competitiveness but also bolster national security by fortifying supply chains and border infrastructure.

For example, the GSA awarded a $33 million contract to a Native-owned firm in Washington to expand the Blaine Land Port of Entry, integrating sustainable design with enhanced inspection capabilities, as described in the DoD press release. Meanwhile, Intel's $3 billion CHIPS Act funding and six companies' contracts to develop a domestic HALEU supply chain underscore the administration's push to secure strategic industries, per an Energy Department announcement.

Strategic Implications for Investors

The convergence of defense modernization and infrastructure resilience is creating a multi-tranche investment landscape. Defense contractors with expertise in AI, space, and propulsion systems-such as RTX, Northrop Grumman, and Huntington Ingalls-are well-positioned to capitalize on multiyear contracts, as noted in the ClearanceJobs roundup. Infrastructure firms, particularly those engaged in BIL-funded projects, benefit from long-term federal commitments, with small businesses receiving over $4.4 billion in contracts since 2021, according to the US Funds ranking.

However, risks persist. The GAO notes $134 billion in unfunded DoD priorities from 2020–2025, with the Indo-Pacific Command alone lacking $11 billion in 2025, as highlighted in the Brookings analysis. Investors must also monitor congressional appropriations and potential executive branch shifts in funding priorities.

Conclusion

The Biden administration's defense and infrastructure strategies are redefining U.S. national security for the 21st century. For investors, this translates into a dynamic market where traditional defense giants and innovative infrastructure firms alike are poised for growth. As the administration balances immediate readiness with long-term modernization, the key will be aligning investments with both geopolitical imperatives and fiscal discipline.