How JPMorgan's Geopolitical Lens Reveals the Next Big Plays in Defense & Middle East Infrastructure

The world is entering an era of geopolitical realignment, and JPMorgan Chase's newly launched Center for Geopolitics (CfG) is positioning clients to capitalize on the tectonic shifts reshaping markets. From the strain on the U.S. defense industrial base to the Middle East's evolving power dynamics, the CfG's data-driven analysis reveals high-potential sectors primed for investment. Here's how to leverage these trends.

The U.S. Defense Industrial Base: A Strained, but Lucrative Market

The CfG's 2025 reports highlight a global rearmament boom, with the U.S. defense sector struggling to keep pace. The Ukraine war, China's military modernization, and Europe's push for “strategic autonomy” are driving unprecedented demand for advanced weaponry, logistics, and AI-driven systems.

But this strain creates opportunities. Defense contractors with production capacity, innovation, and geopolitical foresight will dominate. Key plays include:
- Lockheed Martin (LMT): Leader in F-35 fighter jets and missile defense systems. The CfG notes its role in fulfilling U.S. Indo-Pacific and NATO procurement needs.
- Raytheon Technologies (RTX): Integrating AI into air defense systems and hypersonic technology. Its partnerships with Middle Eastern allies (e.g., Saudi Arabia) are a strategic advantage.
- Northrop Grumman (NOC): Specializes in cyber defense and drone systems critical to hybrid warfare.

Why now? The U.S. is projected to spend $850B+ annually on defense by 2030, with allies like Japan and Australia boosting their budgets. The CfG warns, however, that supply chain bottlenecks (e.g., semiconductor shortages) and labor gaps could limit growth—making firms with vertical integration (e.g., in-house component production) top bets.

Middle East Realignment: Energy & Infrastructure Powerhouses

The CfG describes the Middle East as an “open game” where old alliances are fracturing, and new partnerships are forming. Energy dominance, infrastructure expansion, and geopolitical assertiveness are the keys to unlocking value here.

Energy Titans: Saudi Aramco and ADNOC

• Saudi Aramco (2222.SA): The world's most profitable company leverages its oil reserves as a geopolitical tool. The CfG advises investors to watch its role in hydrogen projects and LNG exports to Europe, which could offset Russia's influence.
• ADNOC (Abu Dhabi National Oil Co.): Partnering with TotalEnergies on green hydrogen and renewables. Its $100B+ infrastructure pipeline includes ports and refineries critical to regional trade dominance.

Infrastructure Plays: The UAE and Qatar

• Emirates Integrated Telecommunications (EITC): A UAE-based firm expanding fiber-optic networks and cybersecurity systems—a must-have in an AI-driven world.
• Qatar Energy: Capitalizing on LNG exports to Asia and Europe. The CfG highlights its role in $300B+ liquefaction projects post-2027.

Risks and the Case for Immediate Action

The CfG identifies two critical risks:
1. Supply Chain Fragility: Defense contractors reliant on Chinese or Russian components face delays.
2. Geopolitical Volatility: Iran's nuclear ambitions or a Russia-China-Middle East axis could disrupt energy flows.

But the upside outweighs the risks. The Middle East is pouring $1.5 trillion into infrastructure by 2030, while defense budgets are growing faster than inflation. Investors who act now can lock in 20-30% returns in sectors where JPMorgan's geopolitical insights give an edge.

Final Take: Bet on the Geopolitical Winners

The CfG's analysis is clear: defense and Middle Eastern infrastructure are the twin engines of this decade's economy.

• For Defense: Prioritize firms with AI integration, global alliances, and supply chain control.
• For the Middle East: Focus on energy firms diversifying into renewables and infrastructure players building the region's future.

The geopolitical chessboard is moving. Investors who align with JPMorgan's insights will be the ones to win.

Act now—before the next geopolitical move reshapes the board.