Next-Gen Fighter Jets: Why Defense Supply Chains Are the New Gold Rush

The U.S. defense sector is undergoing a seismic shift, reallocating billions toward next-generation fighter jets to counter rising threats from China and Russia. This pivot to advanced systems like the Boeing F-47 and the F/A-XX program has created a goldmine of opportunities in aerospace supply chains. Investors who act now can capitalize on a multi-decade cycle of modernization—provided they navigate the right stocks and geopolitical currents.

The F-47: Boeing’s Crown Jewel in the NGAD Race

Boeing’s F-47, the first sixth-generation fighter to enter production, is a game-changer. With a $19.6 billion five-year investment and a 1,000+ nautical mile combat radius, this aircraft is designed to dominate contested skies while slashing costs relative to the F-22. Boeing’s St. Louis facility—now repurposed to focus on NGAD—is a linchpin for this shift, creating a $20 billion supply chain opportunity for engine makers (GE Aerospace) and software integrators.

Crucially, the F-47’s reliance on Collaborative Combat Aircraft (CCA) drones (1,000+ units planned) amplifies demand for systems integration. This ecosystem plays directly to Boeing’s strength as a systems architect, but it also opens doors for niche players like Anduril Industries (YQF-44A drone developer) and General Atomics (YQF-42A).

The F/A-XX: A Costly Gamble, but a Strategic Must-Win

The Navy’s F/A-XX program faces headwinds—budget cuts and technical delays could push its timeline to 2035—but its importance cannot be understated. With China’s DF-26 missiles threatening carrier groups, the F/A-XX’s 850-nautical-mile combat radius and AI-driven drone coordination are vital.

While the F-55 designation (likely a misnomer or placeholder) remains unconfirmed, its rumored ties to F/A-XX upgrades highlight a broader truth: engines and avionics will outpace airframe production in profitability.

F-22 Upgrades: A Costly Dead End for Lockheed Martin

Lockheed’s loss in the NGAD contract to Boeing was a strategic blow. Its focus on upgrading legacy F-22s—priced at $300 million+ per unit—highlights a dangerous path. These upgrades, aimed at adding AI and stealth upgrades, risk becoming white elephants as the F-47 and F/A-XX eclipse them. Investors should avoid betting on F-22 modernization, which could drain profits better spent on next-gen software.

Software Plays: Why Lockheed (and Raytheon) Still Matter

While Boeing leads in airframes, software and AI integration are the hidden winners. Lockheed’s expertise in F-35 avionics and Raytheon’s radar tech position them as critical suppliers to both the F-47 and F/A-XX. The shift to “open architecture” systems, allowing modular upgrades, creates recurring revenue streams.

GE Aerospace: The Engine of Next-Gen Dominance

The Next Generation Adaptive Propulsion (NGAP) engine—developed by GE and Pratt & Whitney—is the unsung hero of these programs. With fuel efficiency gains of 25% and supercruise capabilities, NGAP engines are essential for the F-47’s extended range.

GE’s backlog is already bulging, with orders from Boeing, the Air Force, and even export markets. This is a play on sustained demand, insulated from airframe delays.

Geopolitical Tailwinds: Qatar’s Boeing Deal Signals Global Demand

Qatar’s $3 billion order for Boeing F-15QA jets—a stopgap until next-gen systems mature—underscores a global trend. Nations from the UAE to Japan are modernizing air forces to counter Chinese aggression. This creates a multi-front demand surge for U.S. supply chain partners.

Risks: Budget Cuts and Congressional Pork-Barreling

The F/A-XX program’s $454 million FY2025 funding cut is a warning. Pentagon reviews could gut sixth-gen programs to prioritize near-term needs like Ukraine aid. Investors must monitor congressional hearings and defense budgets closely.

Investment Thesis: Buy the Supply Chain, Not the Airframes

• Core Position: GE Aerospace (GE)—engine tech is non-negotiable for next-gen jets.
• Software Plays: Lockheed Martin (LMT) for avionics and Raytheon (RTX) for sensors.
• Avoid: F-22 upgrades and any firm tied to legacy systems.

Why Act Now?

The next-gen fighter cycle is a decades-long boom. Qatar’s deal, China’s advances, and Boeing’s F-47 milestone all signal that now is the pivot point. The next 12 months will see contract awards and engine orders that lock in winners for years.

The defense sector is rarely this clear-cut. The supply chain is the new gold rush—and the gold is in the engines, software, and systems that make these jets fly.

Action Required: Allocate 5-7% of your portfolio to aerospace supply chains before geopolitical tailwinds turn into a gale.

This analysis is for informational purposes only. Readers should conduct their own research or consult a financial advisor before making investment decisions.