Military Expansion in the Caribbean and Its Impact on Defense and Security Stocks

The U.S. military’s recent escalation in Puerto Rico—marked by the deployment of 10 F-35 fighter jets and infrastructure upgrades—has ignited a strategic shift in Caribbean operations. This move, framed as a response to drug cartels and Venezuelan state-backed threats, underscores Puerto Rico’s role as a linchpin in U.S. Southern Command (SOUTHCOM) operations. For investors, the ripple effects extend beyond geopolitics, directly influencing defense and security stocks tied to advanced military systems, port infrastructure, and logistics.

Strategic Geopolitical Positioning

Puerto Rico’s geographic centrality in the Caribbean has long made it a strategic asset. The Trump administration’s deployment of F-35s to Muñiz Air National Guard Base—a location chosen for its proximity to Venezuela—signals a pivot from low-intensity policing to high-stakes deterrence [2]. This aligns with broader U.S. efforts to counter cartels like the Tren de Aragua, designated as a terrorist organization, which operate within Venezuela’s borders [3]. The deployment follows a controversial airstrike on a Venezuelan-flagged vessel in international waters, raising legal questions about civilian casualties but reinforcing the administration’s hardline stance [1].

Historically, Puerto Rico’s status as a U.S. territory has enabled its use as a forward operating base. The 2025 buildup echoes post-Spanish-American War patterns of American expansionism, albeit modernized to secure economic and military interests rather than territorial conquest [2]. With Venezuela’s instability and the Caribbean’s role as a narcotics corridor, Puerto Rico’s infrastructure—such as the deepening of San Juan Harbor by the U.S. Army Corps of Engineers—further cements its strategic value [4].

Defense and Security Stocks in the Crosshairs

The military expansion directly benefits companies embedded in the defense industrial base. Lockheed Martin (LMT), the sole producer of the F-35, stands to gain from sustained operations in Puerto Rico. The company already maintains a Center of Excellence in the island with 470 employees focused on engineering and cybersecurity, positioning it to capitalize on increased demand for maintenance, software updates, and logistics support [5].

Port infrastructure upgrades also create opportunities. New Fortress Energy (NFE), which operates a fuel-handling facility in San Juan, is poised to benefit from heightened military traffic and commercial navigation needs tied to the harbor’s deepening [1]. Meanwhile, Tote Maritime Puerto Rico LLC and 4 Marine Service LLC have secured multimillion-dollar contracts for logistics and port operations, reflecting the Department of Defense’s prioritization of Puerto Rico as a hub for theater sustainment [6].

The broader aerospace and defense sector is experiencing a tailwind from rising global instability. A 2025 PwC report notes increased demand for next-generation capabilities, with defense budgets expanding to address “persistent threats” in regions like the Caribbean [6]. This bodes well for firms like General Dynamics (GD) and Raytheon Technologies (RTX), which supply systems critical to F-35 operations and surveillance.

Risks and Considerations

While the military buildup presents clear opportunities, investors must weigh geopolitical risks. The legal controversy surrounding the airstrike on the Venezuelan vessel highlights potential diplomatic fallout, which could disrupt operations or invite international scrutiny [1]. Additionally, Puerto Rico’s economic challenges—compounded by debt and natural disaster vulnerabilities—may strain infrastructure projects, creating bottlenecks for contractors.

Conclusion

The U.S. military’s Caribbean pivot, anchored in Puerto Rico, represents a calculated blend of deterrence and economic strategy. For investors, the focus should remain on companies with direct exposure to F-35 operations, port infrastructure, and logistics. However, the geopolitical volatility inherent in the region demands a nuanced approach—balancing the promise of growth with the risks of overreach. As the Trump administration doubles down on this strategy, defense and security stocks with Caribbean ties are likely to remain in the spotlight.

Source:
[1] F-35s Will Be Deployed Against Drug Cartels in Caribbean..., [https://www.military.com/daily-news/2025/09/05/f-35s-will-be-deployed-against-drug-cartels-caribbean-marking-latest-escalation-trump.html]
[2] Flash Info: U.S. Deploys F-35 Fighter Jets in Puerto Rico airfield to prepare military operations against drug cartels, [https://www.armyrecognition.com/news/aerospace-news/2025/flash-info-u-s-deploys-f-35-fighter-jets-in-puerto-rico-airfield-to-prepare-military-operations-against-drug-cartels]
[3] Trump Deploys F-35 Jets to Puerto Rico Amid Rising ..., [https://azat.tv/en/trump-f35-puerto-rico-venezuela-tensions/]
[4] USACE Continues to Embrace Innovation at the San Juan..., [https://americas-engineers.com/usace-continues-to-embrace-innovation-at-the-san-juan-harbor-dredging-and-deepening-project/]
[5] Lockheed Martin & Puerto Rico Foster Innovation, [https://www.lockheedmartin.com/en/us/news/features/2024/partnership-for-progress-lockheed-martin-puerto-rico-innovation-local-communities.html]
[6] Aerospace and defense: US Deals 2025 midyear outlook, [https://www.pwc.com/us/en/industries/industrial-products/library/aerospace-defense-deals-outlook.html]